Savings based families and small investors’ inclination towards buying savings tools has been marking constant rise as the interests of the tools are higher than the rates offered by bank and other institutes on fixed deposits.
The investors registered a record buying savings instruments worth Tk 22,256 crore in the first quarter of the current fiscal, a 14 percent rise year-on-year, Directorate of National Savings (DNS) disclosed recently.
However, the net investment stood at Tk 13,412 crore after the payment of Tk 8,844 crore as the profit and matured investment by DNS, they said.
The net amount, sold in Q1, is the half of the annual sales target of the tools, which is set at Tk 26,197, for the fiscal year 2018-19.
Jaid Bakht, a research director at the Bangladesh Institute of Development Studies, told Bangladesh Post that although bank interest rate on FDR is rising, the interest rates of savings tools are still much higher.
Besides, people consider buying savings tools safer than depositing in bank as some banks are reportedly passing through crisis period, he said.
Explaining the trend Bakht said there are some privileged investment tools like pensioner scheme, provident fund and so on, which boost investment in the savings tools.
Besides, the government did not reduce the interest rate of the tools especially in election year, despite recommendation for a cut in the interest rate.
Mentionable, the government borrows money from public through selling savings tools, including savings certificates and bonds, to meet the fiscal deficit.
An amount of Tk 46,530 crore was borrowed in the last fiscal year 2017-18 and Tk 52,417crore in 2016-17 through the tools.
The government is providing interests at a minimum 7.5 percent to a maximum 11.88 percent rate based on different types of the tools.
Currently, family savings certificate offers 11.52 percent profit, pension savings 11.77 percent, five-year Bangladesh savings 11.88 percent, three months profit-based savings 11 percent, and three-year post office certificate offers 11.88 percent.
The rates are comparatively higher than those offered by banks, financial institutes or any other investment platforms.
According to Bangladesh Bank data, government scheduled banks are providing 4 to 6 percent interest rate on fixed deposit, while private commercial banks are paying 3 to 7 percent only.
Non-bank financial institutes’ interest rates on fixed deposit are also lower than those of the saving certificates.
However, analysts do not take the excess sales of savings tools as a good sign for the economy as every year the government has to make substantial budgetary allocation to repay the loan that raises burden of the government.
They suggest the government to look for alternative funding of savings tools, like issuing bonds.
Golam Moazzem said, the planning of issuing bond can be considered as it will meet the deficit with less cost and cover maximum large investors who are not get chance to invest in saving tools.
Besides, more emphasis could be given on attracting foreign investment, he added.