The Bangladesh government has sold Tk 73.52 billion in savings certificates in the first month of the new fiscal year, a 49 per cent increase over the same period last year.
However, savings certificate sales in July dropped 2.0 per cent from June, the last month of FY2016-17.
The government had previously announced it would decrease the interest rate on savings certificates from the start of the new fiscal year. But, despite repeated assurances from Finance Minister AMA Muhith, the reduced rate has yet to take effect.
According to the National Saving Certificates Department, the government spent approximately Tk 2.29 billion of the earnings to make payments on previous savings certificates in July, leading to net sales of Tk 5.35 billion.
Net sales are calculated by deducting payments on previously sold savings certificates from the income from new sales. This money is deposited in the treasury and used to finance state programs and activities.
Savings certificates are considered a form of loan for the government because it has to pay monthly interest to savings certificate holders, reports bdnews24.com.
The government sold about Tk 17.1 billion in family savings certificates, Tk 13.2 billion in three-month profit-based savings certificates, Tk 6.48 billion in pension savings certificates and Tk 4.80 billion in five-year savings certificates in July.
Sales of savings certificates have climbed steeply due to low rates of interest on bank accounts and stock market uncertainty.
Banks are currently paying between 3.0 to 6.0 per cent interest on accounts. In contrast, interest rates on such accounts could be higher than 12 per cent five years ago.
The interest rate on savings certificates, however, remains above 11 per cent, despite a reduction in May 2015.
This resulted in a record Tk 750 billion in savings certificates being sold in FY2016-17, a 40 per cent increase over the previous fiscal year.
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