Investment in saving tools by small savers declined by 39 per cent in fiscal 2007-08 as much of the fund flowed into more lucrative stock market, officials said.
The National Savings Directorate (NSD) received net investment worth Tk 25.16 billion in 2007-08, dropped by Tk 16.58 billion over that of the previous fiscal. The sales fell short of target by Tk 12.77 billion 2007-08. The target was Tk 37.77 billion for net investment in saving instruments.
In the first quarter of last fiscal sale of saving certificates showed a sharp decline, but it picked up in the second half. The NSD has received net investment worth Tk 7.88 billion in July-December period that increased to Tk 17.28 billion in January-June period.
Internal Resources Division (IRD) secretary Muhammad Abdul Mazid said: "Decline in sale of saving instrument is not a matter of concern. Small savers diverted their fund to capital market seeing its booming growth in the current fiscal."
"Changes in tax measures caused a decline in investment temporarily up to October, but small investors adapted to the measures within a short time," said Mr. Mazid, who is also Chairman of the National Board of Revenue (NBR).
Responding to a question on increased cost of living, he said: "Higher cost of living is one of the reasons, not a major one, for downward trend in investment in saving tools in the last fiscal."
NSD director Saifuddin Ahmed pointed out tax measures and bullish trend in share market as major reasons of decline in saving certificate sale in the first half of the last fiscal.
Investment in saving tools increased in the second half of the just concluded fiscal as small investors came out of confusions about the tax measures.
In 2006-07, investment in saving tools surged up significantly, but it dropped in the just concluded fiscal.
Net investment in savings tools was Tk 42 billion in 2006-07, Tk 30 billion in 2005-06, Tk 25 billion in 2004-05, Tk 39.05 billion in 2003-04, NSD data shows.
Sources said a number of small investors in 2007-08 diverted to the capital market instead of investing in saving instruments after the government imposed 10 per cent tax at source on interest income above Tk 150,000 worth of saving certificates.
In September alone, the sales of savings instrument dropped to a meager Tk 220 million, the lowest in recent time.
Widespread confusion among the small savers on deduction of taxes from interest income is responsible for the decline in investment in saving certificates, said a tax official.
A number of people have showed reluctance in investment on saving tools or taken away profit because of this confusion at the beginning of current fiscal, he said adding that the confidence among the investors had now been restored.
Sales of savings certificates are one of the main sources of government borrowings, as it needs huge funds to maintain its deficit budget. Any fall in the sales of savings instruments automatically increases government's borrowing from banking sources.
Investment in saving tools declines by 39pc in FY'08
Doulot Akter Mala | Published: July 30, 2008 00:00:00 | Updated: February 01, 2018 00:00:00
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