• Monday, Aug 10, 2020
  • Last Update : 05:34 pm

Borrowing from savings tools drops 71.10% in FY20

  • Published at 09:33 pm July 30th, 2020
web-savings
Dhaka Tribune

The borrowing amount from the savings tools was Tk49,939.48 crore in FY19, compared to Tk14, 428.35 crore in the concluding fiscal year

The government's borrowing from savings certificates fell by 71.10% to Tk14, 428.35 crore in the concluding fiscal year, thanks to a number of regulations attached to lessen borrowing from high interest-bearing instruments.

The borrowing amount from the savings tools was Tk49,939.48 crore in FY19, according to the latest data from the  Bangladesh Bank (BB).

Sales of saving instruments dropped drastically owing to the tightened rules and regulations relating to investment in saving certificates, experts have said.

Increase in tax on interest income from investment on savings instruments was also a reason for the fall in its sales during the period, they added.

The government in the budget for 2019-20 fiscal year had imposed a 5% tax at source on interest income from savings certificates of up to Tk5 lakh and a 10% tax at source on interest income from investment in schemes above Tk5 lakh.

Furthermore, those investing in savings instruments need to submit their electronic taxpayers’ identification numbers (e-TIN) and national identity cards (NID).

If the amount is more than Tk1 lakh, they must buy the instrument 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 to Tk11,924 crore in the revised budget owing to their falling sales.

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

In the current fiscal year, the borrowing target from savings certificates was set at Tk20,000 crore.

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