Savings certificate sales see negative growth

Net sales of savings instruments witnessed negative growth of more than Tk 38.59 billion year on year in the first five months of this fiscal as higher-paying encashment outbids investment.
The substantial negative growth in net sales of national instruments continued to expand in November, compared to October, suggesting a confidence deficit in these tools used for government borrowing.
Several factors, including mounting inflationary pressure, financial crisis, reduced profitability in banks and challenging investment conditions, contributed to this slide.
The net sales of savings certificates are calculated by deducting the amount repaid for previously sold certificates from the total sales.
The net sales of such instruments from July to November of fiscal year 2022-23 saw negative growth of more than Tk 16.10 billion, according to Bangladesh Bank data.
Such negative growth also stood at Tk 15.53 billion last November, up from Tk 5.13 billion in October, marking a 49.33-per cent substantial decline.
This means the rate of encashment is higher than the volume of sale during the period.
The BB data showed the total outstanding exceeded Tk 363.53 billion from July to November in FY24. It was over Tk 362.39 billion during the same period in FY23.
On the other hand, overall outstanding crossed Tk 365.08 billion from July to October in FY24.
It stood at more than Tk 363.37 billion in the corresponding period in FY23.
Overall outstanding amount was more than Tk 363.53 billion in November, while it was over Tk 365.08 billion in October, revealed the central bank.
Currently, there are 11 government-owned savings tools on the market, four being savings certificates.
These include 'Five-year Bangladesh Sanchayapatra' (with 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 yield rates after savings certificates mature.
The government has set the net borrowing target from savings schemes for the current financial year at Tk 180 billion.
The government launched an online database named 'National Saving Certificates Online Management System', also making eTIN and national identity card mandatory for savers in 2019.
Economics professor Dr Selim Raihan said recently-made government rules, some reluctance on part of government and inflationary pressure might have led to such significant negative growth in savings tools.
"When inflationary pressure subsides and the purchasing power of people increases, we can expect an upward trend in such investments," he added.

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