The sales of saving instruments dropped drastically owing to the tightened rules and regulations relating to investment in saving certificates
The net sales of national savings certificates (NSC) fell by 76.43% in the first eleven months of the just-concluded fiscal year– July to May- thanks to the strict regulations of the government to lessen investment in high interest-bearing savings instruments.
Net sales of savings instruments fell by Tk35,702 crore year-on-year to Tk11,011 crore during the period (July-May) from Tk46,713crore in the same period of the FY19, according to the latest data from Bangladesh Bank.
The sales of saving instruments dropped drastically owing to the tightened rules and regulations relating to investment in saving certificates, according to experts.
Increase in tax on interest income from investment on savings instruments was also a reason for the fall in its sales during this period, they added.
The government in the budget for the previous (2019-20) fiscal year imposed a 5% tax at source on interest income from NSCs worth up to Tk5 lakh.
It also levied 10% tax at source for investment in schemes above Tk5 lakh.
According to new rules imposed by the government, those investing in the purchase of savings instruments need to submit their electronic taxpayer identification numbers (e-TIN) and national identity cards (NID).
If the amount is more than Tk1 lakh, they must pay the money through bank cheques.
To meet a portion of the budget deficit for the previous fiscal year, the borrowing target from savings certificates was set at Tk27,000 crore. However, the target was reduced drastically in the revised budget owing to a falling trend in NSC sales.