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The net sales of national savings certificates remained negative for the second consecutive month in October, the fourth month of the current financial year 2022–23, amid the government’s discouraging measures on purchasing NSCs.
According to Bangladesh Bank data, the net sales of NSCs was Tk 96.31 crore negative in October after it was Tk 70.63 crore negative in September.
The net sales of NSCs saw a positive growth of Tk 76.65 crore in October 2021.
In the July-October period, the net NSC sales were Tk 63.25 crore negative against a positive growth of Tk 932.46 crore in the same period in the past year.
The net figure became negative as the government paid principal and interest amount more than its sales of NSCs.
The government might want to avoid high interest burden considering the current economic crisis in the country, BB officials said.
Earlier in December 2021, the net sales of NSCs turned negative at Tk 435.96 crore.
In order to meet the FY23 budget deficit, the government has set a target to mobilise Tk 35,000 crore through sales of NSCs in the financial year.
The size of the budget for FY23 is Tk 6,78,064 crore and the original budget for FY22 was Tk 6,03,681 crore.
Market experts said that growing living costs were one of the reasons for the drastic fall in the net investment in NSCs as it eroded the capacity of savings among people.
Besides, the government’s policy in this regard was quite discouraging recently, they said.
As the government has reduced the rate of interest, made it mandatory to show various documents, people have become reluctant to invest in savings certificates, they said.
On September 21, 2021, the government cut interest rates on all kinds of savings certificates by 1-2 per cent.
Besides, the introduction of a maximum limit and making the inclusion of national identification documents mandatory during the purchase of savings certificates were the other reasons for such a steep decline as people did not want to reveal their income and identity while buying savings certificates, the officials said.
The Bangladesh Bank has recently also made it mandatory to show proof of the previous year’s income tax returns for the investment in savings certificates worth more than Tk 5 lakh.
To cut interest cost, the government now prefers borrowing from banks as interests on saving tools are higher than the interest on bank loans, the officials said.
The government’s borrowing from the Bangladesh Bank soared to Tk 72,700 crore at the end of September, according to the BB data.
Bankers said that the country’s banking sector was facing liquidity shortage due to a slow deposit growth against high lending growth and a surge in dollar purchase from the central bank to meet the foreign currency crunch.
The government has targeted to borrow Tk 1,06,334 crore from the banking system in FY23.
In FY22, the total investment in savings certificates amounted to Tk 1.08 lakh crore.
The government spent Tk 40,002 crore to pay off interest in the period.
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