Wednesday, 22 January, 2025
The government has set a ceiling of Taka 45 lakh for an individual to invest in savings certificates.
“A maximum worth of Tk 45 lakh can be purchased in a single name. This savings certificate cannot be purchased in a joint name and no institution’s money can be used in it,” said a BB circular issued Tuesday.
The central bank said that any Bangladeshi aged 18 and above, any Bangladeshi physically disabled person of maximum 65 years old and above may apply for purchasing this savings certificate in the prescribed form.
Under the new system, the interest rate on the five-year Bangladesh savings certificate will be 12.4 per cent for investments up to Tk 7.5 lakh, while investments above Tk 7.5 lakh will earn an interest rate of 12.37 per cent.
The interim government has increased interest rates on various national savings certificates to upwards of 12 per cent in an effort to make these instruments more attractive to savers and to cool inflation.
The finance ministry issued a circular yesterday regarding the interest rate hike on savings tools. The new rates are effective from January 1, according to the circular.
The move comes in the face of falling revenue collection, plummeting foreign funds and higher debt servicing pressure, prompting the government to look for money to meet the overall expenditure.
The rise in interest rates will offer some relief to fixed-income groups, whose earnings have been squeezed by elevated inflation for about two years.
For the family savings instrument, the new interest rates will range from 12.5 per cent to 12.37 per cent, up from the current range of 11.5 per cent to 9.5 per cent. Similarly, the interest rates for the pensioners' scheme will be between 12.55 per cent and 12.37 per cent, an increase from the existing range of 11.76 per cent to 9.75 per cent.
However, previous investors will continue to receive interest based on the earlier rates.
Previously, interest rates on the four savings certificates offered by the Department of National Savings ranged from 11.04 per cent to 11.76 per cent.
The interest rates will now be set according to the weighted average interest rates of five-year and two-year treasury bonds. Every six months, the savings certificate rates will be adjusted after reviewing these treasury bond interest rates.
Investors will receive interest based on the rate applicable during their investment period.
In addition, a premium of up to 50 basis points will be added to the weighted average treasury bond interest rates when determining savings certificate rates, according to a finance ministry source.
The available savings instruments include the five-year Bangladesh savings certificate, the three-monthly profit-bearing Sanchayapatra, the five-year family savings certificate, and the five-year pensioners' savings certificate.
Currently, these four savings certificates have three distinct interest ceilings.
Under the new system, the interest rate on the five-year Bangladesh savings certificate will be 12.4 per cent for investments up to Tk 7.5 lakh, while investments above Tk 7.5 lakh will earn an interest rate of 12.37 per cent.
At present, savers earn 11.28 per cent interest for investments up to Tk 15 lakh at maturity, 10.30 per cent for investments between Tk 15 lakh and Tk 30 lakh, and 9.3 per cent for investments exceeding Tk 30 lakh.
For the three-monthly profit-bearing Sanchayapatra, the new interest rates will range from 12.3 per cent to 12.25 per cent, compared to the current rates of 11.04 per cent to 9 per cent.
Professor Mustafizur Rahman, a distinguished fellow at the Centre for Policy Dialogue (CPD), explained that while the interest rate hike will increase the government’s loan repayment burden, it will also make it more challenging for the private sector to obtain loans from banks.
“People may choose to keep their funds in the banking sector, but this could limit access to capital for private players, with more funds flowing to the government,” Rahman remarked.
He also noted that previously, higher interest rates offered by non-bank financial institutions (NBFIs) discouraged people from investing in savings tools.
Rahman pointed out that the government’s decision aligns with its contractionary monetary policy and aims to control inflation. Additionally, it will provide the government with more liquidity to meet its expenditure needs.
For the family savings instrument, the new interest rates will range from 12.5 per cent to 12.37 per cent, up from the current range of 11.5 per cent to 9.5 per cent. Similarly, the interest rates for the pensioners' scheme will be between 12.55 per cent and 12.37 per cent, an increase from the existing range of 11.76 per cent to 9.75 per cent.
Meanwhile, interest rates for other savings instruments—including the wage earners' bond, US dollar investment bond, and US dollar premium bond—will remain unchanged.
Interest rates on post office term deposits will range from 12.30 per cent to 12.25 per cent.
During the July-September period of fiscal 2024-25, the total sale of national savings tools amounted to Tk 14,991.95 crore, marking a 30.77 per cent decrease compared to the same period in the previous year.
In the first quarter of FY25, total repayments of these tools dropped by 70.95 per cent to Tk 6,659.15 crore, compared to the same period last fiscal year.
As a result, the net sale of savings tools for the July-September months of FY25 surged by 758.74 per cent year-on-year, reaching a net sale of Tk 8,332.80 crore.
Revenue collection for the July-November period fell by 2.62 per cent compared to the same period last year.
During the period, Bangladesh received $1.54 billion, 27 per cent less than the previous year. In contrast, the country’s debt servicing increased by more than 28 per cent, totalling $1.71 billion.
These figures indicate that the government’s pool of funds is shrinking, prompting authorities to seek additional liquidity to cover their expenditures.
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The government has set a ceiling of Taka 45 lakh for an individual to invest in savings certificates.
“A maximum worth of Tk 45 lakh can be purchased in a single name. This savings certificate cannot be purchased in a joint name and no institution’s money can be used in it,” said a BB circular issued Tuesday.
The central bank said that any Bangladeshi aged 18 and above, any Bangladeshi physically disabled person of maximum 65 years old and above may apply for purchasing this savings certificate in the prescribed form.
Under the new system, the interest rate on the five-year Bangladesh savings certificate will be 12.4 per cent for investments up to Tk 7.5 lakh, while investments above Tk 7.5 lakh will earn an interest rate of 12.37 per cent.
The interim government has increased interest rates on various national savings certificates to upwards of 12 per cent in an effort to make these instruments more attractive to savers and to cool inflation.
The finance ministry issued a circular yesterday regarding the interest rate hike on savings tools. The new rates are effective from January 1, according to the circular.
The move comes in the face of falling revenue collection, plummeting foreign funds and higher debt servicing pressure, prompting the government to look for money to meet the overall expenditure.
The rise in interest rates will offer some relief to fixed-income groups, whose earnings have been squeezed by elevated inflation for about two years.
For the family savings instrument, the new interest rates will range from 12.5 per cent to 12.37 per cent, up from the current range of 11.5 per cent to 9.5 per cent. Similarly, the interest rates for the pensioners' scheme will be between 12.55 per cent and 12.37 per cent, an increase from the existing range of 11.76 per cent to 9.75 per cent.
However, previous investors will continue to receive interest based on the earlier rates.
Previously, interest rates on the four savings certificates offered by the Department of National Savings ranged from 11.04 per cent to 11.76 per cent.
The interest rates will now be set according to the weighted average interest rates of five-year and two-year treasury bonds. Every six months, the savings certificate rates will be adjusted after reviewing these treasury bond interest rates.
Investors will receive interest based on the rate applicable during their investment period.
In addition, a premium of up to 50 basis points will be added to the weighted average treasury bond interest rates when determining savings certificate rates, according to a finance ministry source.
The available savings instruments include the five-year Bangladesh savings certificate, the three-monthly profit-bearing Sanchayapatra, the five-year family savings certificate, and the five-year pensioners' savings certificate.
Currently, these four savings certificates have three distinct interest ceilings.
Under the new system, the interest rate on the five-year Bangladesh savings certificate will be 12.4 per cent for investments up to Tk 7.5 lakh, while investments above Tk 7.5 lakh will earn an interest rate of 12.37 per cent.
At present, savers earn 11.28 per cent interest for investments up to Tk 15 lakh at maturity, 10.30 per cent for investments between Tk 15 lakh and Tk 30 lakh, and 9.3 per cent for investments exceeding Tk 30 lakh.
For the three-monthly profit-bearing Sanchayapatra, the new interest rates will range from 12.3 per cent to 12.25 per cent, compared to the current rates of 11.04 per cent to 9 per cent.
Professor Mustafizur Rahman, a distinguished fellow at the Centre for Policy Dialogue (CPD), explained that while the interest rate hike will increase the government’s loan repayment burden, it will also make it more challenging for the private sector to obtain loans from banks.
“People may choose to keep their funds in the banking sector, but this could limit access to capital for private players, with more funds flowing to the government,” Rahman remarked.
He also noted that previously, higher interest rates offered by non-bank financial institutions (NBFIs) discouraged people from investing in savings tools.
Rahman pointed out that the government’s decision aligns with its contractionary monetary policy and aims to control inflation. Additionally, it will provide the government with more liquidity to meet its expenditure needs.
For the family savings instrument, the new interest rates will range from 12.5 per cent to 12.37 per cent, up from the current range of 11.5 per cent to 9.5 per cent. Similarly, the interest rates for the pensioners' scheme will be between 12.55 per cent and 12.37 per cent, an increase from the existing range of 11.76 per cent to 9.75 per cent.
Meanwhile, interest rates for other savings instruments—including the wage earners' bond, US dollar investment bond, and US dollar premium bond—will remain unchanged.
Interest rates on post office term deposits will range from 12.30 per cent to 12.25 per cent.
During the July-September period of fiscal 2024-25, the total sale of national savings tools amounted to Tk 14,991.95 crore, marking a 30.77 per cent decrease compared to the same period in the previous year.
In the first quarter of FY25, total repayments of these tools dropped by 70.95 per cent to Tk 6,659.15 crore, compared to the same period last fiscal year.
As a result, the net sale of savings tools for the July-September months of FY25 surged by 758.74 per cent year-on-year, reaching a net sale of Tk 8,332.80 crore.
Revenue collection for the July-November period fell by 2.62 per cent compared to the same period last year.
During the period, Bangladesh received $1.54 billion, 27 per cent less than the previous year. In contrast, the country’s debt servicing increased by more than 28 per cent, totalling $1.71 billion.
These figures indicate that the government’s pool of funds is shrinking, prompting authorities to seek additional liquidity to cover their expenditures.
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