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The net sales of national savings certificates plunged by 47.36 per cent year-on-year in the July-November period of the current fiscal year 2021-2022.
The government’s budgetary and taxation measures have turned out to be the discouraging factors for the people to buy the high-interest bearing savings tools.
The year-on-year net sales of the savings tools dropped by Tk 9,019.18 crore to Tk 10,024.74 crore in July-November of the current fiscal year 2021-2022 from Tk 19,044.92 crore in the corresponding period of the previous fiscal year, according to a Bangladesh Bank data.
In the first five months of FY22, total NSC sales were worth Tk 44,269.74 crore against principal payment of Tk 34,244 crore.
Against the net sales of Tk 10,024.74 crore, the government had to pay Tk 15,311.93 crore as interest against the government’s outstanding borrowing through NSCs.
The net sales of NSCs dropped sharply due to a set of policy measures, including disallowing individuals to purchase NSCs worth above Tk 2 lakh without submitting the tax identification number.
The government particularly in November sold net NSCs wroth Tk 701.09 crore and it’s interest payment for the month was Tk 3,499.85 crore against the outstanding borrowing through the savings tools.
Prior to making the TIN-related sanction, the government stopped selling one of its savings instruments through banks and the Post Office from May 19, 2021.
Under the new rules, the five-year Bangladesh Sanchayapatra can only be purchased from the Sanchay bureaus.
The rules made the Sanchayapatra purchase difficult for people as the National Savings Directorate has only 70 such bureaus across the country.
In September, the government also reduced the interest rates against investments above Tk 15 lakh in a number of savings instruments to contain the investment spree.
The central bank also reduced the banks’ commission against the sales of NSCs.
Economists said that the government apparently took the policy measures to check high-sales of national savings certificates.
One good thing about the moves was that the lower net sales of NSCs would ultimately reduce the interest spending of the government, they said.
Interest payments against NSCs constitute lion’s share of the government’s total interest spending, they added.
They said that a lower interest expense would create scope to allocate the same resources in other sectors like health and education.
More-than-required sales of the high-cost NSCs in the FY21 prompted the government to tighten the procedure for the sales of the government’s borrowing tools.
In FY21, the net sales of NSCs reached Tk 41,959.5 crore, more than double the government’s initial budgetary target for FY21.
Initially, the target was Tk 20,000 crore, which was later revised upward to Tk 30,302 crore.
A huge difference in interest rates between the NSCs and the bank deposit products had attracted people to invest in NSCs throughout the previous fiscal.
Deposit rates in the banks came down sharply when the nine per cent lending rate ceiling came in force from April 1, 2020.
Some of the banks have even offered interest rates ranging between two per cent and four per cent against their deposit products whereas the interest rates of NSCs range between 10 per cent and 12 per cent.in FY22, the central bank tagged interest rate of some types of deposits with the inflation rate.
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