Published in The Daily Observer on Monday, 3 April 2017
Sale of nat’l saving certificates increase by 67.32pc
The net investment in the national savings certificates and bonds increased in the first eight months (July-February) of the current fiscal year to Tk 33,282.57 crore due to higher interest rates of the government schemes.
The net sale of the national saving instruments was Tk 19,890.55 crore during the corresponding period of the last fiscal 2015-16.
Saving instruments sale increased by 67.32 per cent, according to the latest data of the Bangladesh Bank.
Experts pointed out that higher rate of government saving instruments are hindering sales of private commercial banks saving instruments.
Actually, the government savings certificates and tools are a component of the government to borrow from the banking sector, said experts.
In the national budget for FY17, the government set an annual borrowing target of Tk 19,610 crore from the National Saving Certificates.
Banks are continuing to cut the rates of interest on their deposit products as they have been facing excess liquidity in recent years due to lower credit demand from the private sector, simultaneously, general investors spend their money in the government saving instruments.
Bangladesh Bank (BB) spokesman Subhankar Saha said the government offers higher interest for bonds. For this provision the purchase of bonds increased during the last few years.
Mustafizur Rahman, Centre Policy Dialogue (CPD) fellow, said the net investment in the savings tools would increase more in the coming months if the banks failed to speed up their loan disbursement to the businesspeople.
The banks are continuing to show reluctance in collecting deposits from the clients that ultimately hits the interest rate on the deposit products due to lower loan disbursement, he explained.
The government may achieve the borrowing target easily if the existing trend in the net investments continued in the coming months, said the CPD Fellow.
The upward trend in the net investment on the saving tools would play a positive role in managing the deficit financing of the budget, he said.
The government is now considering speeding up its implementation of various development projects and so it has to take loans from the banking and other sources, mainly selling the saving tools, he also said.
Economist M Mamunur Rashid said investors want security and high profits against their investments and government’s saving instruments are offering higher profits. This is why, the sale of national saving instruments increased in the recent
Simultaneously, the country’s capital market is failing to return higher profits to investors, for which government bonds investment is increasing and getting more popular, he further said.
“This is an irony that investors are choosing to invest in government bonds,” he said. Actually, the government sells various saving instruments mainly to finance deficit in the national budget.