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The recent fall in the sale of national savings certificates is an outcome of various steps taken to limit government borrowing through those instruments, Bangladesh Bank (BB) Governor Abdur Rouf Talukder said on Monday.
"Some media outlets have reported that there has been a debacle in the sale of savings instruments. Actually, it is not a debacle. It has been done by the government deliberately," he said.
"We did it to help boost investments in the capital and bond markets," he told the opening ceremony of the World Investor Week held at the office of the Bangladesh Securities and Exchange Commission (BSEC).
The secretary of the Financial Institutions Division (FID) Sheikh Mohammad Salim Ullah also attended the programme which was presided over by BSEC Chairman Prof. Shibli Rubayat Ul Islam.
The International Organization of Securities Commissions (IOSCO) has scheduled the sixth annual event from October 3-9, 2022.
In August 2022, the net sale of the savings instruments dropped to Tk 80 million, one of the lowest monthly sales in recent years, according to official data.
"Now the instruments are not so attractive," Mr Talukder said, speaking as the chief guest. He added that the higher rate of interest on the savings instruments was detrimental to the growth of the capital and bond markets.
"Keeping this in view, when I was the finance secretary, I had taken some steps like automation of savings certificates transactions and putting a cap on the purchase of those," he said.
Mr Talukder maintained that the government has to spend taxpayers' money on paying interest on savings instruments that are purchased by rich people.
The BB governor also criticised the tendency of entrepreneurs for their dependence on the banks to collect working capital.
"The banks' big problem is their non-performing loans (NPLs). The banks take short-term deposits and make long-term investments and the mismatch between the two hike the volume of NPL," said Mr Talukder.
He said the entrepreneurs in other countries including India collect working capitals from the capital market.
"The entrepreneurs will be able to collect working capital from the bond market if its proper development can be ensured," said the BB governor. "The transactions of the T-Bonds will start on a trial basis from next week."
FID secretary Salim Ullah said the lack of confidence is the main problem of the capital market. "Trust and faith are now eroded and it needs to be restored," Mr. Salim said.
He also laid importance on coordination among the regulatory bodies such as the BB, the BSEC, the National Board of Revenue (NBR), and the Insurance Development & Regulatory Authority (IDRA).
"A commitment is required to ensure any kind of development. We should work together for the development of the bond market," said Mr Salim.
BSEC Chairman Prof. Shibli said the stock market debacles that occurred in 1996 and 2010 will never happen again.
"We'll have to work together to ensure sustainable development of the capital market," he said, adding that the securities regulator has paved the way for distributing the long due dividends held with the listed companies.
"Now the undistributed dividends are reaching the investors' houses. All payments of the bonds and debentures have been settled through the regulatory initiatives," said the BSEC chairman.
He said the country will be benefited if all concerned work together to take the economy ahead.
Former NBR chairman Md. Nojibur Rahman, DSE chairman Md. Eunusur Rahman, CSE chairman Asif Ibrahim, ICB managing director Abul Hossain, among others, were present at the opening ceremony of the World Investor Week.
A panel discussion was also held at the opening ceremony.