Staff Correspondent: Sales of government-offered saving schemes grew by 4.86 percent to stand at Tk 787.84 billion in 2017-18 fiscal year from previous years Tk 751.34 billion. Analysts say the disparity between the interest in bank deposit and savings certificate has encouraged a large number of people to buy savings certificates by the Directorate of National Savings (DNS).
According to figures by the Bangladesh Bank, the government has paid Tk 200 billion as interest in the last fiscal year against Tk 158 billion in the previous 2016-17 fiscal year.
The government’s net borrowing from saving schemes is valued at Tk 465.30 billion in the just concluded 2017-18 fiscal.
“People have been leaning towards these schemes because of the decrease in bank interest rates. The interest rates are comparatively higher so people have been using their savings to buy these schemes,” said Zaid Bakht, a research director at Bangladesh Institute of Development Studies, the government’s research arm.
Commercial banks are offering a maximum 6 percent interest against fixed capital against the over 11 percent offered by the DNS schemes. The interest on five-year family savings certificates on maturity is 11.52%. The rate is 11.76% for five-year pensioner savings certificates, 11.28% for five-year Bangladesh savings certificates, 11.04% for three-year savings certificates paying quarterly profits and 11.28% on three-year post office savings certificates.
The government borrowing from savings certificates has been exceeding its target for the last few years.
Savings certificates are considered a form of loan for the government because it has to pay monthly interest to savings certificate holders.
A volatile capital market and fall in banking interest have encouraged people to invest in the savings certificates. Moreover, no questions are asked over the source of the funds.
Bangladesh Bank says that the high-interest rate has led some banks and financial institutions to invest in the government-offered schemes.
The saving-schemes were originally aimed at fixed-income group and pensioners. But analysts believe the high-income group accounts for nearly for 90 percent of the buyers.
“In reality, high-level government officials, high-income group and politicians accounts for 90 percent,” Ahsan H Mansur of the Policy Research Institute told .
According to the executive director of the private think-tank, 85 percent of the saving certificates are being held by 12 percent of the buyers, while the rest 88 percent buyers have the 15 percent.
The DNS, however, says they have no database on the buyers.
“We have no information on buyers. Any Bangladeshi citizen, over 18 years old, is eligible to buy saving certificates,” said DNS Director General Shamsunnahar Begum.
According to Bangladesh Banks, nearly 20 million people have invested in the saving schemes.