In July-April of FY21, the National Savings Directorate sold certificates worth Tk91,877.02 crore against its principal payments of Tk57,148.38 crore
The government’s net borrowing through the national savings tools reached Tk34,728.64 crore in the July-April period of the current fiscal year, which is 14.6% higher than the revised target for FY21.
The government had set a target of borrowing Tk20,000 crore against savings certificates for the 2020-21 fiscal year, then the target was revised to Tk30,302 crore last Thursday in the revised budget.
In July-April of FY21, the National Savings Directorate sold certificates worth Tk91,877.02 crore against its principal payments of Tk57,148.38 crore.
As a result, the government’s net borrowing against the savings certificate sales stood at Tk34,728.64 crore in the first 10 months of FY21.
In April, the savings directorate sold certificates worth Tk58,86.87 crore against its principal payment of Tk4,360.88 crore.
The dropping trend of interest rates in banks is one of the reasons behind the surge in sales of national savings certificates, said bankers.
At present, most of the banks are collecting deposits at less than 4% interest while the government is offering up to 11.3% interest against the national savings tools.
But the interest rates on deposits were supposed to be higher at this point; to implement the single-digit interest rate on lending, the government had fixed a 6% interest rate on deposits from February last year.
Then the global coronavirus pandemic upended all plans.
To steer the economy away from a steep downturn, the Bangladesh Bank rolled out a vastly expansionary monetary policy for the fiscal year 2020-21 last July, which flooded the market with liquidity, meaning the banks had less of a demand for savers’ funds.
At the end of April this year, excess liquidity in the banking sector stood at Tk201,546 crore, up from Tk198,400 crore a month ago, as per the latest data from the Bangladesh Bank.
The government has fixed the borrowing target through the national saving certificates at Tk32,000 crore for the upcoming 2021-22 fiscal year.