Investment in savings certificates down due to low interest rate

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Investment in cash certificates declined in the December quarter of the current fiscal year after the government cut interest on all types of cash certificates last September.

The government paid more principal amount and interest in the month of December compared to the amount of sales.

In December, savings certificate buyers withdrew Tk 7,898 crore while investment in the sector was Tk 7,362 crore, down Tk 436 crore, a rare incident in 18 months.

The officials said that the government reduced the interest on the investment amount of savings certificates from Tk 15 lakh to Tk 30 lakh by 1.0% and 2.0% on the investment amount of Tk 30 lakh at Tk 45 lakh and above.

As a result, investment began to decline from the following month, they added.

The amount of investment in savings certificates fell to Tk 8,722 crore in October from Tk 11,349 crore in September.

In November, investment increased slightly to Tk 8,941 crore, which fell again to Tk 7,362 crore in December.

In November, customers withdrew Tk 8,240 crore and the investment was Tk 8,941 crore.

In October, customers withdrew Tk 7,956 crore and the investment was Tk 8,722 crore.

According to central bank data, the total amount of investment in savings certificates in the first six months of the 2021-22 financial year was Tk 51,632 crore.

The government spent Tk 42,042 crore in principal and interest at the time, or 81% of the investment.

In this case, the government’s net debt on savings certificates at the time was Tk 9,590 crore, 53% less than the corresponding period last fiscal year.

The government’s net debt on the savings certificate during the July-December period of the 2020-21 financial year was Tk 20,487 crore.

The government aims to borrow a net credit of Tk 32,000 crore on the savings certificate in this financial year to cover the budget shortfall. The government has already levied 30% of the credit target on cash vouchers in the first six months of the current fiscal year.

The total government net credit outstanding in the savings certificate sector is over Tk 3.53 lakh crore in December. In November, the amount was Tk 3.54 crore.

Net government credit was Tk 3,628 crore in August this fiscal year. The amount fell to Tk 2,825 crore in September, then to Tk 766 crore in October, Tk 701 crore in November and Tk 436 crore in December.

When asked for comment, Policy Research Institute (PRI) executive director Ahsan H Mansur said it was a good sign that governments’ net borrowing from savings certificates is falling as they have to pay interest. students. It would be better if the government took loans from banks at lower interest rates, he added.

Previously, people bought savings certificates by resorting to falsification, which is now regulated. It also brought less credit to the government, Ahsan Mansur said.

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