Net sales of savings instruments have plunged by over Tk 125.45 billion year on year in the first nine months (July-March) of the current fiscal year, representing a more than 200-percent decline.
Higher-paying encashments outpacing new investments contributed to this massive decline.
The substantial negative growth in net sales continued in March 2024 compared to February, suggesting a declining confidence in these tools used for government borrowing.
Several factors, including mounting inflationary pressures, financial strain, reduced profitability in banks and challenging investment conditions, have contributed to this downward trend.
The net sales of savings certificates are calculated by subtracting the amount repaid for previously sold certificates from the total sales figure.
Net sales of such instruments from July to March of fiscal year 2022-23 saw negative growth of more than Tk 41.61 billion, according to Bangladesh Bank data.
Sales from July to February of the current fiscal year witnessed a further decline of Tk 88.91 billion.
The negative growth trend accelerated in March 2024, as net sales compared to February saw a substantial 137.1 per cent decline, from Tk 36.53 billion to Tk 15.41 billion.
This means the rate of encashment is higher than the volume of sales during the period.
Bangladesh Bank data showed the total outstanding amount of savings instruments fluctuated slightly.
It exceeded Tk 3.54 trillion from July to March in FY24, compared to over Tk 3.59 trillion during the same period in FY23.
Similarly, the overall outstanding amount for July to February in FY24 crossed Tk 3.58 trillion, down from more than Tk 3.60 trillion in the corresponding period of FY23.
In March 2024, the outstanding amount was more than Tk 3.54 trillion, compared to Tk 3.58 trillion in February. January 2024 saw the highest outstanding amount at over Tk 3.60 trillion, according to the central bank.
There are currently 11 government-owned savings tools available on the market, including four savings certificates.
These include the 'Five-year Bangladesh Sanchayapatra' (offering 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 yields after savings certificates mature.
The government has set a net borrowing target of Tk 180 billion from savings schemes for the current financial year.
In 2019, the government launched an online database called the National Saving Certificates Online Management System. Electronic Tax Identification Numbers (eTINs) and national identity cards became mandatory for savers.
Professor Dr Mustafizur Rahman, a distinguished fellow at the Centre for Policy Dialogue (CPD), told The Financial Express that the government is exploring alternative sources of borrowing, such as foreign and private sector loans.
He added that people are increasingly drawn to alternative short-term investment instruments due to their greater convenience.
Dr Mustafizur Rahman emphasised that current economic conditions are discouraging individuals from investing in savings instruments.
According to him, this reluctance stems from the erosion of purchasing power, high inflation rates and overall economic uncertainty.
The economist also highlighted a noticeable trend of dis-saving among the people. He cited the lack of incentive due to prevailing interest rates as a significant factor.
Dr Mustafizur Rahman noted that people are increasingly hesitant to save money given the limited returns offered.
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