The government's net borrowing from state-owned savings instruments increased by more than 5.0 per cent in the first quarter (Q1) of the ongoing fiscal year compared to that of the previous fiscal, official data showed.
The net sales of savings tools in the last three months had already exceeded more than 50 per cent of the target set by the government for the current fiscal year.
Net sales of savings tools were Tk 134.12 billion in the July-September period of fiscal year (FY) 2018-19, according to the data available with Department of National Savings (DNS).
The current fiscal year's target for net borrowing from savings instruments was set at Tk 261.97 billion, the data showed.
The statistics also showed that net sales were Tk 126.94 billion in the corresponding period of FY 2017-18.
Sector insiders said due to higher yield rates, sales of state-run savings tools have been rising since last few years.
As the people do not have better investment options, they prefer the tools to utilise their hard-earned money, they said.
The government's interest payment is also increasing simultaneously due to huge investments in this sector.
The government paid Tk 54.36 billion as interest in the first three months of FY 2018-19.
The savers received Tk 50.24 billion as interest during the same period in FY 2017-18, the official statistics said.
However, the DNS has no immediate plan to check investment in this sector.
Talking to the FE, DNS Director General (Additional Secretary) Shamsunnahar Begum said they have no plan to reduce the sales of savings schemes.
But they will introduce a database of savings certificates to check violation of the ceiling by early next year, she said.
Though different options including NIDs, passports and birth certificates are open for the identification of savers, they have been found to invest beyond their ceiling, she added.
"After introduction of the databank, NIDs will be made mandatory for the savers to invest their money in this sector," she added.
But preferring anonymity, an official at the DNS said they are discouraging large investment to check higher sales of savings schemes.
Although there is no official instruction, they are trying to keep the investments at a rational level as the burden of interest payment is increasing significantly, he mentioned.
Due to higher rates of yield, many savers are investing their money especially in Family Savings Certificates using the names of their different female members.
Investment by institutional savers in a particular savings certificate is also very high.
The DNS always encourages small savers as the aim of the savings certificates is to ensure financial security for lower and medium income groups, he said.
The DNS sells four types of savings certificates and the rates of yield are up to 11.76 per cent.
An individual is allowed to buy family savings certificates up to Tk 4.5 million. The thresholds for other schemes, including pensioners, are between Tk 5.0 million and Tk 6.0 million.
It also sells different types of bonds for expatriate Bangladeshis.
© 2017 - All Rights with The Financial Express