Govt re-launches family savings certificates
Monday, 4 January 2010
Doulot Akter Mala
The government has re-introduced family savings certificates (FSCs) ranging from Tk 10,000 to Tk 1.0 million with a maximum 12 per cent interest rate.
The finance ministry has issued a gazette re-launching the savings instrument in a bid to encourage the women savers.
Earlier, the government suspended the FSCs on July 1, 2002, five years after they were introduced with a maximum 13.20 per cent interest, following protests from the country's banking system and multilateral donors, as they claimed the FSCs distort credit market.
"The savings certificates will be available from mid-January. It will ensure financial security of women," said a senior finance ministry official.
"We have launched the FSCs with a lower ceiling to encourage the middle-class female investors to bring them under social safety net. A female investor can invest maximum Tk 1.0 million in a single name in the FSCs," he said.
The FSCs will have five different maturities, one to five years, with interest rates ranging from 8.0 per cent to 12.0 per cent. It will increase by single digit from one-year to five-year term. But, there will be no interest if any investor cashes it before one-year.
For five-year term FSCs, monthly interest rates will be Tk 100 for certificates valued at Tk 10,000, followed by Tk 200 interest for Tk 20,000, Tk 500 for Tk 50,000, Tk 1,000 for Tk 0.1 million, Tk 2,000 for Tk 0.2 million and Tk 5,000 for Tk 0.5 million.
If any investor cashes the FSCs before their maturity date, the government will deduct the additional interests added to the actual amount on a year-on-year basis.
Tax-free ceiling for interest received from the FSCs will be Tk 1,50,000 like other saving certificates. Investors will have to pay 10 per cent income tax for interest rates above Tk 1,50,000.
"We have re-launched the FSCs to bring idle money of the female investors in formal channel amid strong opposition of the central bank due to high interest rates," said an official.
Bangladesh Bank has been trying to bring down interest rates of the commercial banks. They are offering maximum 9.0 per cent interest, while FSCs are offering 12.0 per cent, he added.b
The government has re-introduced family savings certificates (FSCs) ranging from Tk 10,000 to Tk 1.0 million with a maximum 12 per cent interest rate.
The finance ministry has issued a gazette re-launching the savings instrument in a bid to encourage the women savers.
Earlier, the government suspended the FSCs on July 1, 2002, five years after they were introduced with a maximum 13.20 per cent interest, following protests from the country's banking system and multilateral donors, as they claimed the FSCs distort credit market.
"The savings certificates will be available from mid-January. It will ensure financial security of women," said a senior finance ministry official.
"We have launched the FSCs with a lower ceiling to encourage the middle-class female investors to bring them under social safety net. A female investor can invest maximum Tk 1.0 million in a single name in the FSCs," he said.
The FSCs will have five different maturities, one to five years, with interest rates ranging from 8.0 per cent to 12.0 per cent. It will increase by single digit from one-year to five-year term. But, there will be no interest if any investor cashes it before one-year.
For five-year term FSCs, monthly interest rates will be Tk 100 for certificates valued at Tk 10,000, followed by Tk 200 interest for Tk 20,000, Tk 500 for Tk 50,000, Tk 1,000 for Tk 0.1 million, Tk 2,000 for Tk 0.2 million and Tk 5,000 for Tk 0.5 million.
If any investor cashes the FSCs before their maturity date, the government will deduct the additional interests added to the actual amount on a year-on-year basis.
Tax-free ceiling for interest received from the FSCs will be Tk 1,50,000 like other saving certificates. Investors will have to pay 10 per cent income tax for interest rates above Tk 1,50,000.
"We have re-launched the FSCs to bring idle money of the female investors in formal channel amid strong opposition of the central bank due to high interest rates," said an official.
Bangladesh Bank has been trying to bring down interest rates of the commercial banks. They are offering maximum 9.0 per cent interest, while FSCs are offering 12.0 per cent, he added.b