• Monday, Sep 27, 2021
  • Last Update : 10:37 pm

Sales of savings tools drops 73% in July-Feb

  • Published at 07:54 pm June 10th, 2020
Savings-Certificate
Representational image of National Savings Certificate of Bangladesh Collected

Stricter regulations act behind the fall, say experts

The net sales of national savings certificates (NSC) fell by around 73% in the first eight months of the current fiscal year– July to February– thanks to the strict regulations of the government to lessen investment in  high interest-bearing savings tools.

Net sales of savings tools fell by 72.85% or Tk25,936.61 crore year-on-year to Tk9,665.88crore during the period (July-February) from Tk35,602.49 crore in the same period of the last fiscal year, according to the latest data Bangladesh Bank (BB) latest data.

However, sales of NSCs rose by 42.65% to Tk1,992.52 crore in February this year, compared to the same month of the previous fiscal year, as revealed in the data.

The sales of saving tools 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 tools was also a reason for the fall in its sales in this period, they added.

The government in the budget for the current 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 tools should 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 current 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.

Talking to Dhaka Tribune, Agrani Bank Chairman Dr Zaid Bakht said  the falling trend in NSC sales was not a very bad indication, as the government was getting money from the banking system at cheaper rates than saving certificates.

Lower dependence on saving tools would provide relief to the government from its soaring debt burden to some extent, he added.

The highest interest rate for savings instruments is near 12% when the government can borrow funds at 8 to 9% from banks.

From July to May this year, the government borrowed Tk64,296.36 crore from the banking system, while the government's bank borrowing target was Tk47,364 crore for FY20, as per central bank data.

In the upcoming budget for FY21, borrowing from savings certificates is likely to be proposed at Tk24,000 crore.

However, experts doubt whether it will be achievable amid the coronavirus pandemic.

Currently, the Department of National Savings is offering four types of savings schemes — 5-year Bangladesh Sanchayapatra, 3-month Profit Bearing Sanchayapatra, Family Savings Certificate and Pensioner Sanchayapatra.

177
Facebook 174
blogger sharing button blogger
buffer sharing button buffer
diaspora sharing button diaspora
digg sharing button digg
douban sharing button douban
email sharing button email
evernote sharing button evernote
flipboard sharing button flipboard
pocket sharing button getpocket
github sharing button github
gmail sharing button gmail
googlebookmarks sharing button googlebookmarks
hackernews sharing button hackernews
instapaper sharing button instapaper
line sharing button line
linkedin sharing button linkedin
livejournal sharing button livejournal
mailru sharing button mailru
medium sharing button medium
meneame sharing button meneame
messenger sharing button messenger
odnoklassniki sharing button odnoklassniki
pinterest sharing button pinterest
print sharing button print
qzone sharing button qzone
reddit sharing button reddit
refind sharing button refind
renren sharing button renren
skype sharing button skype
snapchat sharing button snapchat
surfingbird sharing button surfingbird
telegram sharing button telegram
tumblr sharing button tumblr
twitter sharing button twitter
vk sharing button vk
wechat sharing button wechat
weibo sharing button weibo
whatsapp sharing button whatsapp
wordpress sharing button wordpress
xing sharing button xing
yahoomail sharing button yahoomail