The government is set to cap investment on its bonds for expatriate Bangladeshis in line with that of other state-run savings instruments, officials say.
Currently, there is no upper limit of the bonds for non-resident Bangladeshis (NRBs)-the Wage Earner Development Bond (WEDB), US Dollar Premium Bond (UDPB) and US Dollar Investment Bond (USIB).
In a recent meeting, the cash and debt management committee has taken the decision on fixing the ceiling at a maximum of Tk 10 million in the three expatriate bonds.
An investment ceiling should be imposed on the non-resident Bangladeshi (NRB) bonds as there is no upper limit on investment of the bonds, a meeting participant said.
Presently, the government is providing a 2.0 per cent incentive on sending remittances. On the other hand, it is providing interest at 16 per cent against investing in the existing bonds. For this, giving twin benefits to an individual is unfair.
The finance ministry has already discussed the issue with the National Board of Revenue (NBR).
The meeting has instructed the Department of National Savings (DNS) to take necessary steps in this connection, said the source.
When contacted, director general of DNS Shamsunnahar Begum said, "We are working on capping investment of NRB bonds according to the government's decision that has been taken in a recent meeting."
She, however, said, "We are also scrutinising various issues regarding the issue."
The government introduced three bond derivatives, especially for the NRBs, years ago with the aim of enhancing remittance inflow.
However, the tools were found not much attractive to the NRBs, and could not make a significant headway so far.
Barring the Wage Earners Development Bond, two other forex bonds for wage earners do carry unattractive interest rates per annum. Moreover, the bonds are of high denomination. High denominations and low yields have made the bonds unattractive to most NRBs.
Experts and bankers said the introduction of such investment ceiling on the bonds might not help as the volume of investment is still poor.
The government introduced WEDB in 1988 and UDPB and USIB were launched in 2002.The sales of bonds were stopped from July to December in 2010.
The expatriates have so far invested around Tk 110 billion in three such investment bonds. This is contributing to increase the foreign exchange reserves of the country's central bank.
The government and the Bangladesh Bank (BB) have taken various regulatory and institutional measures to boost the flow of investment through the bonds.
CIP benefits are available by investing in the bonds. Besides, income from the bonds is a tax-free facility.
There is a demand for loans by the NRBs. The BB has already allowed loan facility of up to 75 per cent of the bond holdings of NRBs, according to the BB.
Moreover, NRBs are also allowed to get housing loans from commercial banks.
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