Net sales of savings instruments dropped by more than Tk88.91 billion year on year in the first eight months of the current fiscal as higher-paying encashment outbids investment.
The substantial negative growth in net sales of national instruments continued to expand in February 2024, compared to January, suggesting a confidence deficit in these tools used for government borrowing.
Several factors, including mounting inflationary pressure, financial crisis, reduced profitability in banks and challenging investment conditions, contributed to this slide.
The net sales of savings certificates are calculated by deducting the amount repaid for previously sold certificates from the total sales.
Net sales of such savings tools witnessed a decline of Tk73.50 billion from July 2023 to January 2024, according to Bangladesh Bank data.
Net sales of such instruments from July to February of the fiscal year 2022-23 saw negative growth of more than Tk35.09 billion, the BB data said.
Such negative growth also stood at Tk15.41 billion last February, up from Tk12.87 billion in January, marking a nearly 20 per cent substantial decline.
This means the rate of encashment is higher than the volume of sale during the period.
The BB data showed the total outstanding amount exceeded Tk3.58 trillion from July to February in FY24.
It was over Tk3.60 trillion during the same period in FY23.
On the other hand, overall outstanding amount crossed Tk3.60 trillion from July to January in FY24.
It stood at more than Tk 3.60 trillion in the corresponding period of the FY23.
Overall outstanding amount was more than Tk3.58 trillion in February, while it was over Tk3.60 trillion in January, reveals the central bank.
Currently, there are 11 government-owned savings tools on the market, four being savings certificates.
These include 'Five-year Bangladesh Sanchayapatra' (with an 11.28-per cent yield), 'Three-monthly Profit-bearing Sanchayapatra' (11.04 per cent), 'Family Savings Certificate' (11.52 per cent) and 'Pensioner Sanchayapatra' (11.76 per cent).
These are the maximum yield rates after savings certificates mature.
The government has set the net borrowing target from savings schemes for the current financial year at Tk180 billion.
The government launched an online database named 'National Saving Certificates Online Management System', also making eTIN and national identity card mandatory for savers in 2019.
Taking to The Financial Express, Professor Dr. Mustafizur Rahman, a distinguished fellow at the Centre for Policy Dialogue (CPD), emphasised that current economic conditions are deterring individuals from investing in savings instruments.
This reluctance stems from the erosion of purchasing power, high inflation rates, and overall economic uncertainty, according to him.
Dr Rahman highlighted a noticeable trend of dis-saving among the people, citing the lack of incentivisation due to prevailing interest rates as a significant factor.
He noted that people are increasingly hesitant to save money given the limited returns offered.
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