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The net sales of national savings certificates dropped by 49.88 per cent or Tk 14,621.97 crore year-on-year in July-February of the fiscal year 2021-2022 as the government tightened NSC sales rules to contain people’s buying spree of the savings instruments.
According to Bangladesh Bank data, the net sales of NSCs dropped to Tk 14,689.41 crore in the first eight months of the fiscal year 2021-2022 against Tk 29,311.38 crore in the same period of the previous fiscal year.
In February, the net sales of NSCs dropped by 30.1 per cent or Tk 1,086.29 crore year-on-year.
The net sales dropped to Tk 2,522.91 crore in February 2022 from Tk 3,609.2 crore in the same month of 2021.
Prior to the plunge in FY22, the sales of NSCs were significantly high in the fiscal year 2020-2021 and the surge prompted the government to slap budgetary restrictions.
Poor interest rates against bank deposits were another reason for the significant surge in NSC sales in FY21.
Demand for liquidity in the banks dropped sharply after the Covid outbreak that prompted banks to lower interest rate of deposits.
Even some of the banks offered as low as 2 per cent interest against deposits.
So, many of the savers found interest rates on savings instruments lucrative since the NSCs offered as high as 12 per cent against its different products.
The sales of NSCs in FY21 rose to Tk 41,959.5 crore, more than double the government’s initial budgetary target for the particular year.
Initially, the target was Tk 20,000 crore, which was later revised upward to Tk 30,302 crore.
To contain the sales, the government in June 2021 barred individuals to purchase NSCs worth above Tk 2 lakh without submitting the tax identification number.
Prior to making the TIN-related sanction, the government had stopped selling one of its savings instruments through banks and the Post Office from May 19, 2021.
Under the changes, 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 2021, 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 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 the lion’s share of the government’s total interest spending, they added.
They said that a lower interest expense would create scope for allocating the same resources in other sectors like health and education.
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