Sales of savings tools rise despite rate cuts
Sales of savings instruments went up 18.66 percent in the first month of fiscal 2015-16 compared with the same month a year ago despite interest rate cut on the scheme.
In July, savings instruments worth Tk 3,236 crore were sold, up from Tk 2,727 crore in the same month last year.
In 2014-15, savers bought certificates worth Tk 42,659 crore, up by more than 75 percent from the previous year.
This prompted the government to slash the interest rates by 2 percentage points in May to bring down its expenditure on interest payment as well as create a level-playing field for banks which had faced stiff competition in attracting deposits.
A senior official of Bangladesh Bank, however, said despite the cuts, the interest rates of savings instruments are still higher than those offered by banks. Savings instruments now offer returns between 11.04 percent and 11.76 percent whereas it is below 9 percent at banks.
According to central bank statistics, the average interest on bank deposits was 6.8 percent in June, which was 7.79 percent a year ago.
An official of Sonali Bank said banks' deposit rate has been sliding gradually for the last two years as the investment situation in the country has not yet improved.
The government's borrowing from the banking system decreased, as the sales of savings instruments increased.
The government had targeted to borrow more than Tk 30,000 crore from the banking system in the last fiscal year to meet the budget deficit. But it did not borrow a single taka ultimately because of excessive sales of savings certificates; rather it repaid its past loans.
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