A section of well-off people have apparently made a mad dash for post office accounts right after the government tightened rules on investment in high interest-bearing national savings certificates.
Fixed deposits in Post Office Savings Bank soared 66 per cent year-on-year to Tk 11,730 crore in the first half of the fiscal year, according to data from the Bangladesh Post Office (BPO).
At the same time, investment in savings certificates sold by the post office plummeted 88 per cent to Tk 1,870 crore from Tk 15,870 crore.
"This clearly shows that a section of the people have switched to fixed deposit accounts in the post office to avoid giving personal details that are required for purchasing national savings certificates," said a senior BPO official seeking to remain unnamed.
The rules, which were tightened last year, stipulated that savers would have to submit their taxpayer identification number (TIN) for availing national savings certificates, whose interest rates can reach as much as 11.76 per cent -- way higher than what banks offer.
Another rule stated that if the value of the national saving certificates went over Tk 1 lakh, the payment had to be made using cheques of the buyer's bank account.
This essentially reveals sources of large purchases, putting off unscrupulous investors, who had previously been able to flout the individual purchase limit through cash payments.
The rules for the post office's ordinary and three-year tenure fixed deposit accounts had remained unchanged up until February 12 this year, prompting depositors to switch to banks and post office accounts in the last couple of months, said officials.
The latest data on the deposits in banks are unavailable.
However, it grew threefold to Tk 28,710 crore in the July-September period of fiscal 2019-20 from a year earlier, finance ministry data showed.
The switch to post office accounts by affluent people prompted the government to cut the interest rates on the ordinary and fixed deposits to 5 and 6 per cent from 7.5 and 11.28 per cent respectively to discourage them from making deposits there, said a finance ministry official.
The interest rates on national savings certificates issued by the Department of National Savings have remained unchanged at more than 11 per cent.
The sudden interest rate cut of the post office accounts led to an outcry from savers and drew criticism from various quarters, as the post office has over 50 lakh savings accounts, mostly owned by small and low-income groups with many of them being women and farmers in rural areas.
Following the reaction, Finance Minister AHM Mustafa Kamal said the government would revisit the interest rate cut considering the effect it had on small and marginal savers.
The finance ministry is exploring options, including the one on making the interest rate inversely proportional to the investment, meaning the higher the investment the lower will be the interest rate, officials said.