Saturday, June 15, 2024


Dhaka Tribune

More people are buying saving certificates again

Certificates worth Tk551 crore were sold in May and Tk581 crore were sold in April, returning to positive growth

Update : 05 Jul 2023, 11:35 PM

National Savings certificate sales have increased, showing a positive trend for the second month in a row. People bought more savings certificates than they redeemed in the months of April and May.

Sales through banks and savings bureaus climbed in FY23, while sales through post offices fell.

Saving certificates worth Tk551 crore were sold in May, while Tk581 crore were sold in April, according to Bangladesh Bank data.

However, data shows net sales of saving certificates were still negative for the first 11 months of FY23.

From July to May 2023, the government will return Tk3,029 crore more than it sold. 

During this period, the government borrowed Tk74,700 crore and had to return Tk77,700 crore. 

This signifies that the amount borrowed by the government through saving certificates has reduced. 

According to economists and bankers, this occurred as a result of excessive inflation and different restrictions on savings certificates.

They also mentioned that a few months ago, banks were under pressure to remove deposits due to certain negative news about a few banks. In that case, consumers may be more inclined to invest in savings certificates.

According to data, sales through banks and savings bureaus climbed in FY23, while sales through post offices fell. 

Sales of savings certificates through post offices fell by Tk25,948 crore in the first 11 months of FY23. 

At the same time, sales through banks increased by Tk22,665 crore and more than Tk255 crore was sold through National Savings Bureau.

Industry insiders said since profit and redemptions through bank accounts from where savings certificates are purchased has been made mandatory, more people are now buying savings certificates through banks.

Borrowing target

The government sets a target for borrowing from foreign sources and banks and savings certificates to fulfill the budget deficit.

In the fiscal year 2023-24, the government has set a target of borrowing Tk18,000 crore through national savings instruments, which is 10% less than the revised budget and 49% less than the current fiscal year.

The government initially set a target of Tk35,000 crore by selling saving certificates for FY23. 

However, the target was later decreased to Tk20,000 crore.

The net sale of savings certificates refers to what remains after paying the interest and principal on the savings certificate sold previously.

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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