‘Interest rates on savings tools still higher than other deposit schemes’

Finance Minister AHM Mustafa Kamal has said although the government has lowered the interest rates on different national savings instruments, the interest rates on savings certificates are still higher than other deposit schemes now prevail in the market.

The minister also said the recent decision to cut interest rates on savings certificates would not affect the small and marginalised investors.

He came up with the statement while replying to a question during a briefing after the meetings on Cabinet Committee on Economic Affairs (CCEA) and the Cabinet Committee on Government Purchase (CCGP) on Wednesday, report BSS and UNB.

He said usually the savings certificates target the marginalised people and also the pensioners.

“But in recent times the government has noticed that all are coming to these savings tools due to the comparatively higher interest rates. If such a trend continues, then the other drivers of the economy will become stagnant," he added.

Kamal said although the interest rates on savings certificates have been slashed, there was no cut on the rates with an investment of up to Taka 1.5 million considering the marginalised section of people.

"But, still the interest rates of savings certificates are higher than other deposits now prevail in the market," he said.

The new rates will not affect the present investment and will only be applicable for fresh investments.

According to the new rules, which came into effect on Tuesday, investors will get a lower interest rate if the investment amount is higher than Taka 1.5 million.

Asked whether the government wants to discourage people towards savings tools, Kamal said the government wants to motivate those sections of people to savings tools who actually require those.

Citing an example, he said that the government does not want anyone to invest Taka 10 million in savings certificates, rather the investment could range between Taka 100,000 to Taka 3.0 million and through this no one would be affected.

The finance minister said the recent cut in interest rates has been made considering the rates of deposits in other banks, and also the interest of the marginal investors.

He, however, informed that rationalisation of the interest rates of the savings certificates is an ongoing process and the rates might go up or go down.

On Tuesday, the Internal Resources Division of the finance ministry issued a notification to reduce the profit rates of savings certificates.

It said the profit margins of five-year Bangladesh Savings Certificates, three-month profit-based Savings Certificates, Pensioner Savings Certificates and Family Savings Certificates have been lowered.

It also said the interest rates of term-deposit will also decline, but general profit rates of Post Office Savings Certificates will remain unchanged.

At present, any depositor can annually obtain 11.28 per cent profit on the five-year Bangladesh Savings Certificate.

But under the new rules, those who have invested more than Tk 1.5 million in these savings certificates will get a profit at 10.3 per cent.  And if the investment is more than 3.0 million, the profit rate will be 9.3 per cent.