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No durable way for savings certificate owners

By :Golam Rabbani
Published : Sep 23, 2021 08:57:00 AM | Business

The coronavirus pandemic left job uncertainty, investment risk, and stock market uncertainty. In this context, banks and savings certificates are a safe place to keep your savings. But due to the recent increase in liquidity, the interest rate on bank deposits has come down by 2 per cent. The situation forced the government relying on the profit of the savings certificate. As a result, the position of Tk 2.5 lakh crore outside the bank has become insecure.

Taka two and a quarter lakh crore outside the bank

According to the Bangladesh Bank, the people’s amount of money outside the banking sector was 2 lakh 27 thousand 42 crore at the end of last July.

In June, it was 2 lakh 9 thousand 517 crore. Within a month, the amount has increased by about 17 thousand crore. A portion of this money is to be returned to the bank as savings. But clients are discouraged by lowering interest rates at banks and savings certificates.

Profit decreasing after longtime recommendation

Economists have long suggested reducing the rate of return on savings certificates. But savings certificates are extremely popular financial products for investment among all classes of people. That is why the tax identification number or TIN is made mandatory in the case of sale of savings certificates before handing over the profit. Besides, online system has also been introduced. Again, the maximum amount of savings certificates that can be bought in the name of single and joint is also limited. After that the rate of profit was reduced.

Interest in banking sector deposits declined

Earlier, the highest interest rate on bank loans was fixed at 9 per cent from April last year which impacted the interest rate of the deposit. At the end of last July, the average interest rate on deposits in the banking sector dropped to four percent. This is also the average interest rate. In some banks, the interest rate on deposits has come down to 2 percent. On the other hand, the average inflation in the country is around five and a half percent. Considering inflation, ordinary people do not get any profit by keeping money in the bank. Rather the value of money decreases. In this situation, last August, the central bank imposed an obligation to keep the interest rate on bank deposits above inflation.

The possibility of a stock market recovery

The stock market is another medium of investment for ordinary people outside of banks and savings certificates. When interest rates in banks fall, the rate of return on savings certificates is likely to increase investment in the stock market.

Dhaka University Professor of Economics MA Taslim told The Report.live that bank deposits and savings certificates are the most reliable place for people. Not everyone can invest in the stock market. There are also investment risks here. It is taking the general people into a risky investment which is not good for the future economy.

He further said that people are being tempted in various e-commerce as there is no way to save in the right place. So at the moment the issue of reducing profits can be considered.

How much has been reduced in which savings certificate?

Family savings certificates are the most sold in the country. At the end of the five-year term, the savings rate is 11.28 percent. Now with an investment of more than Tk 15 lakh in this savings certificate, the profit rate has been reduced to 10.30 percent. And in case of investment of more than Tk 30 lakh, this rate is 9 percent. 

According to the notification, the five-year Bangladesh Savings Certificate currently yields 11.28 percent profit at the end of the term. Under the new rules, those who have invested more than Tk 15 lakh in these savings certificates will get a profit at the rate of 10.30 percent at the end of the term. And if the investment is more than 30 lakh, the profit rate will be 9 percent.

At the end of the current three-year term savings certificate, the profit rate at the end of the term is 11.4 percent. It has now been reduced to 10 per cent for investments of more than Tk 15 lakh. Those who invest more than Tk 3 million in these savings certificates will get 9 percent profit at the end of the term. At the end of the term, the five-year term pension savings for the retirees would have yielded a profit at the rate of 11.76 per cent. Now those who have invested more than Tk 15 lakh in these savings certificates will get profit at the end of the term at the rate of 10.75 percent. And if the investment is more than 30 lakh, this rate will be 9.75 percent. Post Office Savings Bank's general profit remains at 7.5 per cent, no change has been made.

At present, the three-year term profit of Post Office Savings Bank is 11.28 percent. Now, with an investment of more than Tk 15 lakh, the profit rate will be 10.30 percent. The investment of more than 30 lakh will be 9.30 percent.