With sales sliding by nearly 60 per cent, the government measures intended to contain transactions of savings instruments have started making an impact.
The sales of four popular savings instruments during the July-September period last was Tk 90 billion, a 59.4 per cent decline over the same period a year earlier.
The sales during July-September in 2018 accounted for Tk 222.56 billion, according to the Department of National Savings (DNS).
As part of restricting sales of national saving certificates, the government is currently making a database of the buyers of the tools.
One has to submit multiple documents, including e-TIN to buy the borrowing instruments.
Besides, national identity cards, bank accounts, mobile numbers and cheque transaction are also mandatory while investing in the risk-free instruments.
Those who had earlier invested in the savings certificates also require the same documents while drawing profits or encashment upon maturity or in case of reinvesting.
In the past, these documents were not required, which resulted in the abuse of the system such as borrowing crossing the limit and fictitious investment, an official of the department of savings said.
Finance secretary Abdur Rouf Talukder said on Thursday the sales of savings certificates have dropped significantly in the first quarter after automating the sales of savings certificates.
"This will help prop up the banking sector as a large amount of money will go to banks," Mr Talukder said.
He also said at the end of the calendar year the money market will be much sound.
If people face hassles in buying the NSDs, the money should have diverted to the banking channel.
Still, the deposit growth was 12 per cent up to August 2019, around 1.0 percentage point growth over July-August the year before.
But economists fear the poor sales of the instruments will exert pressure on the banking sector since revenue mobilisation remains sluggish.
The revenue collection growth was merely 3.35 per cent during July-August period in 2019 over the same period a year earlier. The fiscal year's target is Tk 3.25 trillion.
The economists also said the crowding-out effect may happen if the government borrowing from the banking system increases significantly to fund its hefty budget.
Crowding-out is a situation in the financial market where personal consumption of goods and services and investments by businesses are reduced because of increases in government spending and deficit financing sucking up available financial resources and raising interest rates.
"We cannot rule out the crowding-out impact on the economy as the government borrowing from the banking system has increased significantly in recent times," said Dr Zahid Hussain, a former lead economist of the World Bank in Dhaka.
He said the government up to the third week of October of this fiscal year borrowed over Tk 300 billion against its annual projection of Tk 470 billion from the source.
Economist Dr Ahsan H Mansur told the FE that the slow pace of revenue collection will impose a pressure on the government to borrow from the banking system.
"The lower sales of savings certificates may allow the government to make less interest payment," he said.
"To my mind, the main concern is the poor revenue collection as it will put a big pressure on the government to finance its large development budget," he said.
The government has planned to spend Tk 2.15 trillion for the annual development programme.
Currently, people purchase savings tools from Bangladesh Bank, Department of National Savings, Sonali Bank branches and other banks besides the postal service.
Four savings certificates -- five-year Bangladesh Sanchayapatra, three-monthly Profit Bearing Sanchayapatra, Family Savings Certificate and Pensioner Sanchayapatra -- are popular among savers as the yield rates are around 11 per cent.
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