The government is likely to revise downward the yield rates of its savings instruments to ease up the bulging debt burden following a surge in the demand for the same from the savers.
Officials said the matter was discussed at a meeting of the Cash and Debt Management Committee (CDMC), held at the Ministry of Finance (MoF) on April 13.
"We've discussed the issue at the meeting," a senior official of the MoF told the FE, without elaborating on the proceedings of the meeting, presided over by Finance Division Senior Secretary Mahbub Ahmed.
Another senior official, familiar with the government borrowing activities, said the meeting had decided in principle to revise the yield rates of the savings certificates.
He said the yields on saving instruments will be re-fixed matching with the interest rates on term deposits in banks, but will be higher than rates of bank deposits.
The deposits covering tenures between three and 12 months are the prime modes of the fixed deposits which constitute around 90 per cent of the total public money deposited with banks.
However, he said, the interest rates on US Dollar Premium Bond, US Dollar Investment Bond and Wage Earner Development Bond will remain unchanged.
Four types of savings certificates -- Five Years Sanchayapatra, Three Monthly Sanchayapatra, Pensioner Sanchayapatra and Poribar Sanchayapatra -- are now on the money market for public subscription.
The finance ministry has already collected information from the central bank on interest rates on fixed deposits of different tenures, offered by non-banking financial institutions (NBFIs).
"We've already submitted a report in this connection to the MoF in line with their requirement," a senior official of the Bangladesh Bank (BB) told the FE.
He also said debt-servicing burden on the government would go up significantly by the end of the current fiscal year (FY) 2014-15 if the abnormal trends in sale of savings certificates continued. Net sales of national savings certificate jumped by nearly 193 per cent to Tk 182.83 billion during the July-February period of this FY from Tk 62.46 billion in the same period of the FY'14.
During FY'15, the government's original target for net borrowings through national savings schemes was Tk 90.56 billion to partly finance its budget deficit.
Talking to the FE, a senior banker said savers, particularly small ones, are encouraged to invest in the risk-free instruments mainly due to higher returns.
"We're facing unhealthy competition in collecting fresh deposits from depositors because of higher yields on the savings instruments," the banker said to explain the rethink of government policy on mobilizing deficit finances.
Currently, average interest rate on deposit, offered by the commercial banks, is around 8.50 per cent, while the rate for savings tools averaged 13 per cent.
siddique.islam@gmail.com
Govt may cut yield rates of hot-selling savings tools
Siddique Islam | Published: April 21, 2015 00:00:00 | Updated: November 30, 2024 06:01:00
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