According to a decision of the Internal Resources Division (IRD) of the finance ministry, the investment ceiling for the savings instruments has been increased by Tk 5 lakh to Tk 10 lakh.

Joint investors can now buy a maximum of Tk 50 lakh worth of savings certificates instead of Tk 40 lakh previously.

An individual can now purchase a maximum Tk 25 lakh worth of certificates while the limit was Tk 20 lakh earlier.

The IRD also increased the rate of commission for post offices and banks, which sell the certificates. Previously they used to get a commission of Tk 20 for a sale. They will now get 0.5 percent commission on the volume of sale.

The government has five types of savings certificates. The five-year-term Bangladesh Shanchayapatra offers a maximum of 10.5 percent interest; the three-monthly profit-based Shanchayapatra 10 percent at the highest and postal savings bank general account a simple rate of 7.5 percent. Postal savings bank half-yearly profit-withdrawal ones offer 9.5 percent interest at the highest and the postal savings bank profit non-withdrawal ones a maximum of 11.5 percent.

The government's latest pension scheme for retired government employees also gets a boost. Buyers can now purchase up to Tk 25 lakh worth of this certificate instead of the previous maximum of Tk 20 lakh.

The IMD also lifted a restriction on profit reinvestment. Previously if an individual wanted to invest the profit of his certificates at the end of their term, the ceiling was Tk 20 lakh. For joint investors, the ceiling was Tk 40 lakh.

Individuals and joint investors can now keep on investing beyond their ceiling of Tk 25 lakh and Tk 50 lakh if they keep on pumping in their profits at the end of their terms.

The IRD took this decision upon reviewing the sale figures of the certificates during July-October this year. During this period the net sale of certificates stood at Tk 834 crore as against Tk 1,728 crore in the corresponding period of the previous year. These figures came out after repayment to investors.

The net sale of savings instruments marked a poor total of Tk 31 crore (minus repayment) in October this year as against Tk 358 crore in October last year.

An IRD source says, "If this trend continues, the government will be compelled to borrow from the banks to repay the investors. This is why we need to make this investment easier and little bit attractive."

The government slashed the interest rates in four instalments with the last one in July, pushing down the value of certificates by around 5 percent in the last three years. It also stopped the most lucrative Defence Savings Certificate that offered a maximum of 17.5 percent interest.

The maximum interest rate for a savings certificate (minus defence certificate) was 16.5 percent three years ago.