The government has initiated a move to update the relevant rules to allow investment of gratuity funds in national savings certificates (NSCs).
Internal Resources Division (IRD) of the Ministry of Finance recently formed a body and asked it to submit a report in a month along with recommendations on how the savings instruments could be used in best possible ways as per the government's policy.
Representatives from the National Savings Directorate (NSD), IRD, Finance Division, National Board of Revenue (NBR) and Postal Department were included in the committee.
It would also recommend possible means of scrutinising possibilities of investing gratuity fund and withdrawal of interest, and making popular the savings bonds abroad.
One member of the committee said the existing savings rules prohibit investment of gratuity fund in savings instruments.
"Companies or organisations cannot invest the gratuity fund in savings certificates. Some of them cannot invest the fund even in FDR (Fixed Deposit Receipt) as per the trust act," he said.
Earlier, some companies and commercial banks invested their gratuity funds in the national savings instruments but did not get any profit despite several attempts. The IRD has found different companies have invested gratuity funds worth Tk 2.72 billion in the savings certificates.
Of them, Delta Brac Housing (DBH), Citi Bank NA and Rupali Bank have encashed the savings certificates worth Tk 1.01 billion, including profit.
IFIC Bank, Dhaka Bank, Brac Bank, Prime Bank and Bank Asia have encashed the instruments worth Tk 730 million but they were not allowed to take profit.
Meanwhile, encashment of instruments worth Tk 960 million held by IFIC Bank, United Leasing Company, Berger Paints, HSBC, Rupali Bank, Pubali Bank, Citi Bank NA, Eastern Bank, Brac Bank has remained pending for the government's decision.
According to the Sanchayapatra Rules, 1977 (First Amendment 2002), investing in five-year Bangladesh Savings Certificates from gratuity fund is not legal. Also, the fund needs approval from a tax commissioner.
In the budget for current Fiscal Year (FY), the NBR imposed 5.0 per cent source tax on interest income/profit earning of provident, pension or gratuity funds from bank deposits and savings instruments.
Currently, only 5.0 per cent of the population are employed in public services and enjoy pension benefits. The remaining 95 per cent are employed in the private sector.
Only 8.0 per cent of those employed in the private sector receive gratuity benefits, Finance Minister AMA Muhith said in the budget speech for the current FY.
He pointed out that there is no pension or gratuity scheme for the remaining 87 per cent of the employed population.
Officials said the gratuity fund should not remain idle, and there should be investment scopes for the fund.
© 2024 - All Rights with The Financial Express
