Govt hints at rethinking postal savings interest rate cut

Just a week after drastically cutting interest rates on post office savings, the government yesterday hinted at reconsidering the decision amid widespread criticism.

Finance Minister AHM Mustafa Kamal shared the development with journalists after a meeting at the Bangladesh Secretariat.

On February 13, the government issued a directive on lowering the interest rate on three-year fixed deposits from 11.28 percent to 6 percent on maturity and also revised the savings deposit rate from 7 percent to 5 percent, with a view to implementing the single-digit interest rate in the country's banking sector.

According to the directive, the new interest rates took immediate effect.

The move sparked massive reactions from post office savers and experts.

Savers said it has discouraged their eagerness about saving money.  

Experts too condemned the move, saying it will make small depositors turn to low regulated co-operative societies to park their savings. 

After the meeting, the finance minister also said, "The previous interest rate was fixed to support the lower income people lead a better life. But what we have observed is that many solvent and even rich people have deposited their money into the Postal Savings Bank."

"We will give identification numbers to everyone to ensure the presence of really marginalised people in the postal savings tools. We will take the initiative to cut taxes on the poor after a survey," the minister added.

"Postal savings tools will be for the poor people only and we will monitor it," Kamal said.

The post office has three types of savings tools – fixed deposit, savings deposit and post life insurance policy.

The government has set a target to reduce the lending rate of banks from April 1 to expand industrial investment. To achieve the target, banks have started to bring the deposit rate down to 6 percent from February 1.

According to official data, in December 2019, the Post Office Savings Bank received Tk1,806 crore in fresh fixed deposits and Tk249 crore in fresh savings deposits.

In the July-December period, the Post Office Savings Bank got Tk13,397 crore in deposits, of which fixed deposits amounted to Tk11,726 crore.