When Rubina Islam (pseudonym), 40, bought a family savings certificate of Tk10 lakh a few years ago with her savings, the family of five was doing very well.
With the combined income of Tk8,500 in profits from the savings certificate along with her husband's salary, the family lived comfortably.
But the increase in the price of fuel, electricity and the rising daily commodities' prices has them paying more for the same service.
She said it has become difficult to run a family with the same budget. “I have no option other than withdrawing the savings certificate to pay the expenses of my family,” Rubina said.
Familiar stories can be heard across the country. Data from the National Savings Directorate revealed that the pattern of redeeming older investments on savings certificates rather than fresh ones have persisted.
Economists said that despite interest rate cuts with hard laws in savings certificates, the safest investment for people was on the rise.
However, recently, the cost of transportation, education and medical care has increased along with the increase in the prices of all daily commodities in the market, which has reduced people's ability to save.
As a result, the sale of savings certificates has hit rock bottom.
According to the latest report of the savings directorate, the amount of savings certificates sold in the first nine months (July-March) of the current fiscal year (FY23) has not been able to repay the interest and principal of the savings certificates.
Data shows that during this time, the government has repaid Tk4,161 crore of saving certificates by taking loans from its treasury and banks.
In March alone, savings certificates worth Tk6,795 crore were sold for which the government had paid Tk7,447 crore for principal and profit in that month.
That means the payment amount is more than the sale amount.
That is, the net sales shortfall (negative) stands at Tk652 crore.
What is left over after paying the interest and principal of the savings certificate sold earlier is called the net sale of savings certificates.
However, sales of savings certificates had been booming for several years due to low-interest rates on bank deposits and a prolonged downturn in capital markets.
But now that the price of everything in the market is on the rise, it has affected the sale of savings certificates.
Officials from the central bank explained the downward trend by stating that customers withdrew money to safeguard their spending power or in quest of higher returns due to inflationary pressures.
Accepting the ongoing economic tough time, Mohammad Shah Alam, director of the National Savings Directorate earlier said: “The prices of all kinds of goods have increased in recent times. So, people are spending more money than saving in savings certificates.”
“Besides, there are some effects of policy changes. For example, women were earlier able to invest in savings certificates with the money given by their children or family members. But now, they need a TIN certificate to invest more than Tk5 lakh.”
Ahsan H Mansur, executive director of the Policy Research Institute of Bangladesh said: “People have less money in hand. Due to inflation and living expenses, people are no longer able to save as they did before.”
“Due to fewer savings certificate sales, the government is borrowing money from banks. However, in this case, the government has to take more loans from Bangladesh Bank as commercial banks do not have such capital,” he added.
Although the government agencies are seeing the decrease in the sale of savings certificates as a blessing, this former IMF economist thinks that because of this, the domestic borrowing pressure of the government on the banking sector is rising too.
Declining investment in savings certificates is often considered good for the government as the net sale of savings certificates is considered a loan or the government's internal borrowing.
However, the decline in the sales of savings certificates is showing that living expenses have increased to a level where people no longer have any means to save money for any future emergencies that may come.
