Net borrowing from saving tools likely to miss target in 2010-11
Arafat Ara | Saturday, 9 April 2011
Arafat Ara
The net borrowing from savings certificates may fall short of target as their sale dropped drastically due to investors' apathy to buying the saving tools because of lower interest rates and slapping of fresh tax, officials said. They said the state-run Directorate of National Savings (DNS) could borrow only around Tk 26.12 billion from sales of saving certificates in first eight months of the current fiscal year (2010-11) from July to February against its target of over Tk 40 billion for the said period. DNS's net borrowing in July to February period of the current fiscal was down by 63 per cent from Tk 73.97 billion of the corresponding period of the last fiscal year. "The present saving certificates, which earlier allured the investors for their secured profit have lost their attraction due to reduced interest rates," an official said seeking anonymity. "There has been a declining trend in the overall sales of saving certificates after the government imposed tax on interest gains from the investment tools and reduced their rates of interest in the budget for the 2010-11 fiscal," he added The government in the budget for 2010-11 fiscal imposed a 10 per cent tax on interest gains from all types of savings instruments but recently introduced 'Family Savings Certificate' and Pensioners' Savings Certificates. Apart from the imposition of tax, the government also reduced the rate of interest up to by 2.0 per cent on interest/profit to be gained from such savings tools. The official, however, observed that such fiscal measurers had led to a continuous withdrawal of investment from most of the saving tools, except for a couple of items, by savers. The overall sales of saving certificates in July- February period had declined. The DNS sold savings certificates to the tune of about Tk 121 billion (Tk 12099.66 crore) during the July February period of the current fiscal against Tk 164.51 billion( Tk 16451.11 crore) in the corresponding period of last fiscal, the figures showed.
The net borrowing from savings certificates may fall short of target as their sale dropped drastically due to investors' apathy to buying the saving tools because of lower interest rates and slapping of fresh tax, officials said. They said the state-run Directorate of National Savings (DNS) could borrow only around Tk 26.12 billion from sales of saving certificates in first eight months of the current fiscal year (2010-11) from July to February against its target of over Tk 40 billion for the said period. DNS's net borrowing in July to February period of the current fiscal was down by 63 per cent from Tk 73.97 billion of the corresponding period of the last fiscal year. "The present saving certificates, which earlier allured the investors for their secured profit have lost their attraction due to reduced interest rates," an official said seeking anonymity. "There has been a declining trend in the overall sales of saving certificates after the government imposed tax on interest gains from the investment tools and reduced their rates of interest in the budget for the 2010-11 fiscal," he added The government in the budget for 2010-11 fiscal imposed a 10 per cent tax on interest gains from all types of savings instruments but recently introduced 'Family Savings Certificate' and Pensioners' Savings Certificates. Apart from the imposition of tax, the government also reduced the rate of interest up to by 2.0 per cent on interest/profit to be gained from such savings tools. The official, however, observed that such fiscal measurers had led to a continuous withdrawal of investment from most of the saving tools, except for a couple of items, by savers. The overall sales of saving certificates in July- February period had declined. The DNS sold savings certificates to the tune of about Tk 121 billion (Tk 12099.66 crore) during the July February period of the current fiscal against Tk 164.51 billion( Tk 16451.11 crore) in the corresponding period of last fiscal, the figures showed.