After a lukewarm performance in FY2019-20, savings certificates was the go-to option for all sorts of investors as Tk37,386 crore worth of certificates were sold in the first 11 months of FY2020-21, more than double from the same period of the previous fiscal.
According to the Directorate of Nationals Savings (DNS), the primary net target for selling savings certificates was Tk20,000, but this was raised to Tk30,302 crore as the revised target.
DNS figures also showed that the net sales of savings certificates was Tk37,386 crore, which is almost three times more than the net sales of Tk 14,424 crore in the previous 2019-20 fiscal year.
The total sales of Tk99,557 crore, after being accumulated with the June figure of FY21, is slated to surpass the previous record of Tk90,342 crore in FY19.
A total profit of Tk30,305 crore has been paid to the customers of the savings certificates from the state treasury in FY21.
Data analysis shows that from July 2019, taxpayers' identification number (TIN) certificate was made mandatory for purchase over Tk1 lakh, while a 5% source tax on profits of the savings certificates was also introduced.
If the investment was more than Tk10 lakh, the source tax became 10%. Having a bank account was also made mandatory.
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After that, the sales of savings certificates began to decrease.
However, the minimum bar for purchase with a TIN certificate has been raised from Tk1 lakh to Tk2 lakh in the current FY22.
AB Mirza Azizul Islam, economist and financial adviser to the former caretaker government, attributes this beyond-significant jump to the low interest rates offered by the banks, as well as increased remittance figures and the economic turnaround from the Covid-19 pandemic so far.
Speaking to Dhaka Tribune, he said that amid the pandemic, savings certificates provide a better investment option than bank deposits.
"Our banks implement an interest rate of 6% on savings accounts, which is actually a little over 5%. It is also logical that the record remittance figures spur people to put their money on something viable in the long run, as a significant part of the population invest their hard-earned money on savings certificates, as it still provides viable profits to run their families," he also said.
However, there still remains a level of disparity as ordinary investors receive a certain interest on savings certificates, while ministers, MPs and other VIPs receive higher interest. The government should address this disparity to boost more sales, the economist added.
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According to Bangladesh Bank's latest data, Remittance inflows hit a record high of $24.77 billion in the fiscal year 2020-21.
Expatriate Bangladeshis sent 36% more remittance in FY2020-21 compared to the same period in the previous fiscal, when it was $18.20 billion.
In addition, at present, there are four types of savings certificates in circulation in the country.
Among them, the profit rate of family savings certificates is 11.52%, the interest rate of five-year Bangladesh savings certificates is 11.28%, the profit rate of three-month profit-based savings certificates is 11.4% and the profit rate of pensioner savings certificates is 11.76%.
