Govt adjusts interest with market rates

FE REPORT | Published: January 15, 2025 22:39:21

The interim government has re-fixed the interest rates of five savings certificates adjusting with the market rates for the first time.
The rates of interest of the savings tools have been adjusted upward by 1.0 per cent for the January-June term.
The new rates take retrospective effect from January 01, according to a press statement issued by the Internal Resources Division (IRD) on Wednesday.
The IRD has also introduced two-tier schemes instead of the previous three tiers for five savings schemes to offer equal benefits to the underprivileged groups of people.
The new two tiers include Tk 750,000 and more than Tk 750,000.
Earlier, Chief Adviser Prof Muhammad Yunus approved a proposal to re-fix the interest rates for savings certificates.
As adjusted, any investment up to Tk 750,000 in the five-year 'Bangladesh Savings Certificate' will receive an interest rate of 12.40 per cent.
On the other hand, the rate will be 12.37 per cent for any investment exceeding the above ceiling.
Currently, the interest rate for the scheme stands at 11.28 per cent.
For the three-year 'Quarterly Profit Savings Certificate', the prospective interest rate for investments up to Tk 750,000 is set at 12.30 per cent.
On the other hand, any investment exceeding the amount will earn 12.25 per cent.
Currently, the scheme offers an interest rate of 11.04 per cent.
The five-year 'Pensioner Savings Certificate' will offer 12.55 per cent for investment up to Tk 750,000 and 12.37 per cent for higher investment.
The interest rate under the scheme currently stands at 11.76 per cent.
For the five-year 'Family Savings Certificate', the interest rate will be 12.50 per cent for investment up to Tk 750,000, while any investment exceeding this amount will earn 12.37 per cent.
Currently, the scheme offers an interest rate of 11.52 per cent.
For the three-year 'Post Office Fixed Deposit', the interest rate is 12.30 per cent for investments up to Tk 750,000, while it is 12.25 per cent for investments above the amount.
Presently, banks offer interest rates of 9.0-11 per cent on fixed deposits, but savings schemes currently offer returns between 11 and 11.5 per cent.
Plummeting domestic revenue and a reduced focus on borrowing from the banking sector has prompted the government to lean towards borrowing through savings certificates, according to officials.
In fiscal year 2022-23, the net borrowing from savings certificates was negative, amounting to Tk 33.47 billion.
The original budget for the fiscal set a target of Tk 180 billion in net borrowing from savings certificates. However, the revised budget adjusted the target to a negative Tk 73.10 billion.
For the current fiscal year, the government has significantly increased the target, aiming to borrow Tk 154 billion from the sector.
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