Four-month sales overshoot whole fiscal’s target

Arafat Ara
The government's borrowing from savings instruments during the July-October period of this fiscal (2014-15) surpassed the entire fiscal's target as higher yield rates lured the savers to invest more in these secure tools.
The net sales of savings certificates stood at Tk 90.77 billion in the four months of fiscal year (FY) 2014-15 against the target of Tk 90.56 billion, set earlier by the Finance Ministry for the entire fiscal year, data of the Department of National Savings (DNS) showed.
The government may change its policies including reduction of yield rates of the national savings certificates to keep the sale volume normal, DNS officials said.
They indicated that if the sales continue, the net borrowing may stand at three times more than that of the fiscal target, set for the FY 2014-15. And then government has to pay a big amount on servicing the debt.      
The target of paying yields to the holders of savings certificates has been set at Tk 98.77 billion in this FY.
A senior DNS official said they have already reported to the Internal Resources Division (IRD) about the impact of the current upward trend in the sales of savings tools to decide its future strategy.     
They said reduction of yield rates on deposit schemes by commercial banks led to rise in overall investment in the government's savings instruments.
Presently, some banks are offering only about 7.0 to 8.0 per cent rate of interest on their fixed deposit schemes. But the DNS is offering up to 13.45 per cent yield rates, encouraging people to divest funds to govt savings tools, said the officials. Many savers enchased their time deposits from banks and purchased savings certificates over the last six months, said a bank official wishing anonymity.
The DNS officials also attributed such a rise to the present situation of share market and others savings sectors saying the savers have no other options except buying government savings instruments considering rates of yields and security.
Auto-reinvestment facility of some savings instruments is another cause for such a development, he mentioned.
He, however, said the DNS also has undertaken campaign for increasing sales of savings instruments.
The official figure showed that the net sales of saving certificates and investment bonds stood at Tk 22.56 billion only in October against Tk 6.01 billion in the same month of previous FY 2013-14.
The figure also said the gross sales of the savings instruments was Tk 131.86 billion against encashment of Tk 41.09 billion in the four months of FY 2014-15.  
But the gross sales of the savings instruments was Tk 74.33 billion against encashment of Tk 47.35 billion in the four months of FY 2013-14.  
The Family Savings Certificates were the most popular product in four months due to its higher yield rates. Net sales of the certificate stood at Tk 42.64 billion.
The government's net borrowing of savings certificates and investment bonds was at Tk 117.07 billion during the FY 2013-14 against Tk 7.72 billion in the FY 2012-13.
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