The government is preparing a national database of all investors in government savings certificates to see their compliance with the investment limit and detect any investment under fake names.
Officials said the finance division under the Ministry of Finance has taken the initiative to monitor the investment in the savings instruments to manage government borrowing patterns.
Information of savings-certificate investors will be in the automated database. It will be interlinked with the National Identity (NID)-card number.
The finance division is devising the recordkeeping database, styled, 'iBAS system' or integrated budget and accounting system.
Once prepared, the database would come in help to the account-keepers in detecting if anyone was investing in savings certificates in excess of the ceiling or purchasing the instruments under any pseudonym.
The volume of investment by each individual or company can be known under the iBAS system.
Talking to the FE, Finance Division Secretary Md Muslim Chowdhury said the database would help the government see the actual position of investment by individual investors in the savings instruments.
"We have observed many of the savings tools involving small amounts remaining unsold notwithstanding the fact that the scheme is meant for small investors," he said.
He has expressed the hope that the national database of the investors in savings certificates would be completed over next three-four months.
There are allegations that many an investor in the savings tools hides their names and buy the instrument in the names of others.
Although 5.0 per cent tax at source is applicable to capital gains (profit amounts) from all savings certificates, the saving-tool investors are not required to furnish Taxpayer Identification Number (TIN) like in the case of bank depositors.
Bank depositors have to pay 5.0 per cent additional tax in case of not having TIN.
According to data from the National Savings Directorate (NSD), net sales of saving certificates amounted to more than 57 per cent of the entire fiscal year's target in the first four months.
Savers are largely interested in savings tools because of higher yield rates -- 11.04 per cent to 11.76 per cent -- while it is 6.0 to 7.0 per cent in banks on fixed deposits. Interest on savings-account deposits is a rock-bottom 3.0 per cent.
In fiscal 2016-17, net sales of savings tools hit an all-time high at Tk 523.27 billion, over 2.5 times higher than government target of Tk 196.10 billion.
Government's interest expenditure increased significantly due to higher borrowing through savings instruments.
Another senior official at the ministry of finance said the government is forced to borrow at higher rates on savings tools which the finance division is authorised to monitor.
Although NDS is under the supervision of Internal Resources Division (IRD) under the same ministry, but, according to Rules of Business, receipt of interest amount on savings tools is managed by the Finance Division, he said.
The tools are mainly meant for middle-and lower-middle-income groups of people but it is alleged that well-off sections of people are investing in the instruments by hiding their names in absence of national database to track the investors.
Talking to the FE Monday, former finance adviser Dr AB Mirza Azizul Islam said the government is bearing high expenses due to high interest rates on savings certificates for passing on its advantages to the lower-and middle- income groups.
Social purpose will not be served if it is misused by investors in higher-income brackets, the economist noted.
"Through the national database, the government can check its misuse by surpassing the maximum ceiling of investment and purchasing in duplicate names," he said.
Responding to a query, he said furnishing TIN could be made mandatory for the new investors in the savings certificates but it should not be imposed with retrospective effect on the existing investors.
© 2024 - All Rights with The Financial Express
