Sales of government-offered saving schemes up by 25%
Published : Monday, 1 August, 2016 at 12:44 PM Count : 579
The governmentâ€™s move to cut interest rates for the saving-schemes it offers has failed to dampen sales.
The 25 percent jump in sales of these instruments in 2015-16 fiscal means that itâ€™s adding to the governmentâ€™s debt-burden.
According to figures by the Directorate of National Savings (DNS), sales in the fiscal that ended on Jun 30 stood at Tk 530.11 billion.
Amid the hike in the sales, the government last year revised rates for the DNS-offered schemes cutting them by two percent on an average.
After the rate cut, a five-year term family savings scheme of Tk 100,000 now yields a monthly return of Tk 912. Earlier the same investment used to fetch Tk 1,070 per month.
Analysts attribute the increase in sales of saving instruments to popular perception that they are less risky.
â€œAll other avenues of investment for general people are almost shut. Banks are giving seven to eight percent interest on deposits. The capital market is also sluggish,â€ said BIDS researcher Zaid Bakht.
The issue worries Finance Minister AMA Muhith.
â€œThe attractive rates are leading to more sales but that is adding to the governmentâ€™s burden,â€ he told bdnews24.com.
He, however, said that they are not considering to revise the rates now.
The central bank chief has said that they would advise the government to go for it.
Governor Fazle Kabir said this while replying queries from the media on Jul 26 after announcing the monetary policy for the first half of the ongoing 2016-17 fiscal.
For the government, these savings instruments are a great way to mop up savings but it is also a cause for worry because it adds to the government's debt burden.