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Dhaka Tribune

Savings certificate sales drop drastically in July

Investments fall in July, net sales fall by 77.53% or Tk1,356 crore

Update : 06 Sep 2022, 07:57 PM

The sale of national saving certificates, which was declining since last year, almost hit rock bottom in July, the first month of the new fiscal year 2022-23.

Insiders believe sales of the savings tool may decrease further in the next months, despite several steps taken by the government in recent times.

In July FY23, the net sale of savings certificates stood at only Tk393 crore, which was Tk2,104 crore in the same month of FY22.

Directorate of National Savings (DNS)'s latest data analysis shows that investment in saving certificates fell by 81.32% or Tk1,711 crore year-on-year (Y-O-Y).

According to Bangladesh Bank data, net investment in saving certificates in June this year was Tk1,749 crore.

That means within a month, net sales fell by 77.53% or Tk1,356 crore.

Data analysis also shows that in July FY21 saving certificates net sale was Tk3,708 crore and Tk2,212 crore in July of FY20.

On the other hand, Tk19,915 crore was invested in saving certificates in FY22, which was Tk41,959 crores in FY21.

According to the sector people, sales decreased due to the inclusion of various conditions in the purchase of savings certificates, and its interest rates, especially by reducing profits.

Excessive interest payments have also reduced sales, they said.

Income tax return mandatory

Earlier on July 25, Bangladesh Bank made it mandatory to show proof of last year's income tax return for investment in savings certificates worth more than Tk5 lakh.

In addition, income tax return documents were made mandatory to open an account of more than Tk5 lakh in Bangladesh Post Office Savings Bank.

According to the Directorate of National Savings Certificate and government gazette, Bangladesh Bank directed the banks to take necessary measures for proper compliance with Section 48 of the Finance Act, 2022 for investments over Tk5 lakh as savings certificate and in Post Office Savings Banks.

Jail and fines for lying to buy savings certificates

On September 1, the Parliament passed the Public Debt Bill 2022 with a provision stipulating a maximum six-month prison term and Tk1 lakh fine for providing wrong information to buy savings certificates.

The new law stated that if a citizen or their representative provided false information for the ownership of certificates issued under government security or national savings schemes, they would be jailed for up to six months and fined Tk1 lakh.

The Bill stated that a court could not take cognizance of charges filed by someone other than Bangladesh Bank or National Savings Directorate.

The government will not bear liabilities after paying the capital and interests at the end of a savings certificate’s term.

Govt borrowing target

In the main budget of the outgoing fiscal year, the target of borrowing from the savings certificates sector was Tk32,000 crore. It is also kept unchanged in the revised budget.

But finally, in FY22 only Tk19,915 crore was borrowed from savings certificates.

The government has set a target of borrowing Tk35,000 crore in FY23.

What is left over after paying the interest and principal of the savings certificate sold earlier is called the net sale of savings certificates.

The proceeds from the sale are deposited in the government treasury and used by the government to implement state development.

In return, the savings certificate customers have to pay profits every month.

In economic terms, the net sale of savings certificates is considered a loan or government's internal borrowing.

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