Mad rush for nat’l savings certificate purchase

September 29, 2014

The net investment in the national savings certificates and bonds increased by 228.71 per cent in the first two months of the financial year 2014-15 compared with that in the same period of the FY14 as clients invested heavily in the NSCs due to low bank deposit rates.
According to the Directorate of National Savings data released on Sunday, the net investment in the savings instruments increased to Tk 4,328.48 crore in July-August of the FY15 from Tk 1,316.77 crore in the same period a financial year ago.
Bangladesh Bank and DNS officials said that the ‘mad rush’ of people in purchasing the savings tools made the government worried as the net investment would surpass the government-set target by a good volume at the end of this financial year if the present investment trend continues.
The government set a net borrowing target of Tk 9,056 crore from the NSCs for the FY15.
The savings instruments worth Tk 6,271.85 crore were sold through banks, national savings bureaus and post offices in the first two months of the FY15 whereas the sales of the NSCs in the two months of the FY14 were Tk 3,869.28 crore in worth.
The government is now monitoring closely the investment trend in the savings tools and it will be forced to take decision to curb the investment if the existing trend continues this month, they said.
‘Clients continued to make investment heavily in the savings certificates and bonds in the last and the ongoing financial years as the scheduled banks cut the interest rate of their savings products due to increasing excess liquidity amid sluggish business in the country,’ a DNS official told New Age on Sunday.
The businesspeople are yet to start their business expansion by receiving loans from the banks due to political uncertainty, the official said.
He said banks were now reluctant to take deposit from the clients, so they cut the interest rate on their deposit products.
Banks are now giving maximum 8 per cent to 9 per cent rate of interest to the clients for the fixed deposit schemes while the interest rate on the government savings tools is between 12.59 per cent and 13.45 per cent.
The net investment in the national savings certificates and bonds had hit a new record at Tk 11,707.31 crore in the FY14.
The previous highest of the net investment in the saving tools was Tk 11,590.64 crore posted in the FY10.
The DNS data showed that the net investment in the savings instruments had increased by 1,414.84 per cent in the FY14 from Tk 772.84 crore in the FY13.
DNS officials said that the net investment in the national savings certificates and bonds would hit a
new record this financial year if the existing trend continues in the coming months.
‘The authorities would have to find alternative way to tackle the higher investment in the government savings tools if the clients continue to make large investment in the tools,’ a BB official told New Age on Sunday.
He said that the government might decrease the rate of interest on the national savings certificates and bond if the higher investment continues this month.
The government may take a decision in this regard in the last week of October, he said.
The government has not much demand to take loan from its savings tools right now as its development work is now maintaining a slower pace, BB officials said.
The BB data showed that the government borrowing from the banking sector stood at Tk 2,775.91 crore as of September 23, 2014.
A DNS official said that previously clients had made huge premature cashing of their savings tools, but the trend (premature cashing) changed significantly in the FY14.

-With New Age input

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