Savings certificates sell like hotcakes with 55pc growth in FY17

Dhaka,  Sun,  20 August 2017
Published : 02 Aug 2017, 23:25:47
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Savings certificates sell like hotcakes with 55pc growth in FY17

Savers switch sides as banks squeeze interests on deposits


FE Report

Government's net borrowings through the state-sponsored savings instruments marked over 55 per cent annual growth to Tk 524.17 billion last fiscal as those turned hotcakes for higher yields.

Sources said the savers switch sides as banks squeezed interests on deposits.  And the rush for buying savings tools prompted the department concerned to bat for pressing the brake.        

According to Department of National Savings (DNS) statistics, the net sales of savings certificates worth Tk 524.17 billion in the fiscal year (FY) 2016-17  marked a growth by Tk 74.17 billion over the revised target set in March last.

The net sales of the savings certificates had amounted to Tk 336.88 billion in the FY 2015-16, DNS figures showed.  

Currently, people prefer to buy savings certificates as the yield rates are fairly higher and attractive than what the banks pay on deposits, officials said.  

Because of increased sales of savings tools, the government paid Tk 158.16 billion to the savers as profit in the FY 2016-17, Tk 46.66 billion up from Tk 111.50 billion in the FY 2015-16  

The net sales of Family Savings Certificate retained its top position with Tk 201.76 billion in the total investment in four instruments, followed by Three-Month Profit-based Savings Certificate Tk 144.58 billion and Five-Year Bangladesh Savings

Certificate Tk 50.31 billion, in the last fiscal year.

DNS officials attributed such a high investment in the government savings schemes to attractive yield rates and other facilities, particularly in Family Savings Certificate, Five-year Bangladesh Savings Certificate and Three-month Profit-based Savings Certificate.

People are investing their money in Family Savings Certificate under the names of their female family members. Besides, the institutional investors are cashing in on the high yields of Five-Year Bangladesh Savings Certificate.

Although there is investment ceiling for individuals, institutional savers have no maximum limit to investment in that particular scheme. The savers are also enjoying auto-reinvestment facilities.

To rationalise the trend in investment in this sector the DNS sent a proposal to the finance ministry wherein it requested limiting the investment from institutional investors.

It also proposed not allowing investment by underage and joint-name investors to keep the net sales at a reasonable level.

But they are yet to get any response, a senior official told the FE.

The DNS is offering a yield rate of 11.28 per cent on the five-year Bangladesh Savings Certificate, 11.52 per cent on Family Savings Certificate (FSC), 11.04 per cent on three-month Profit-based Savings Certificate and 11.76 per cent on Pensioner Savings Certificate.

More than 25 million people had invested in public savings tools since independence. Of them, 20 million are the direct beneficiaries in the sector while 5.0 million are industrialists, retired officials and institutional investors.

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