Jump in savings certificate sales in January
Despite lowering the investment limit on savings certificates, introducing the electronic system and making Taxpayer's Identification Number (TIN) mandatory, investors have continued to show increased interest in savings tools.
There was a leap in the net sales of savings certificates in the first month of this year.
Net savings certificates sales were Tk5,210 crore in January which is three times more than in December and twice as much as in January last year.
Meanwhile, net savings certificates sales in the first seven months of the current fiscal year were Tk25,700 crore, which is three times more than the same period last year.
In the same period of 2019-20 fiscal year, the net savings certificate sale was Tk7,670 crore.
Although the government was supposed to receive Tk20,000 crore by selling savings certificates to meet the budget deficit for the current financial year, in seven months it has been close to Tk26,000 crore.
Investors are turning to savings certificates as interest rates on bank deposits fell.
At present, the average interest rate on bank deposits is below 5%, while the average interest rate on savings certificates is 11%.
So sales are going on in full swing even if the government does not want to.
Analysts think that the government's interest-bearing expenditure will increase significantly as sales exceeded the target.
Asked about this, Ahsan Mansoor, executive director of Policy Research Institute (PRI), told The Business Standard that at present, investors are naturally leaning towards savings certificates as the gap between interest rates on bank deposits and savings certificates is increasing.
"In this case, no one has anything to do," he said.
"The interest rate should be reduced to keep pace with everything. Otherwise, at the end of the fiscal year, the government will have to bear a massive amount of interest on savings certificates.
Otherwise, the government will fall into trouble, he said, adding that the revenue is not increasing so much that there will be no problem in paying this interest.
Instead, in the situation of revenue income, other expenses have to be reduced and interest has to be paid.
