Expats bond investment coming under online management

The government is set to bring the transactions of three government bonds for expatriates under the National Savings Scheme Online Management System. If launched, it will require expatriates to use their national identity card (NID) to invest in savings schemes.

The Bangladesh Bank will launch the system on Tuesday, people familiar with the matter told The Business Standard (TBS).

The move will ensure transparency in bond investment and allow the government to easily track how much money is being invested by whom and where.

Earlier the national savings certificates (NSCs) were brought under the online database.

There are three bond savings schemes for expatriates — Wage-Earner Development Bond, US Dollar Premium Bond, and US Dollar Investment Bond, according to the Bangladesh Bank and finance ministry officials.

Among the three bonds, expatriates can invest in the Wage-Earner Bonds in their own names, as well as in the names of family members living in Bangladesh. For the other two, expatriates can only invest using foreign currency in their own names.

All of the bonds allows an expatriate to invest a maximum of Tk1 crore— singly or collectively. The limit is applicable even in the case of collective investment in savings certificates and bonds.

The bonds can be bought and redeemed from all offices of the Bangladesh Bank, its foreign branches, exchange houses, exchange companies, and local authorised dealers (branches of the banks that deal with foreign currency).

Currently, the government has no central database containing information on the investments made through these bonds. Meaning, it has no way of knowing how much money is one investing using the bonds from any single system. The announced move will remove this bottleneck in ensuring transparency in bond investment.

Speaking about the issue, National Savings Directorate Director (policy, audit and law) Md Shah Alam said, the transaction activities of the Bangladesh Savings Certificate, 3-month profit-based savings certificates and family savings certificates have already been brought under online management. Now, these bonds are being brought under the same system as expatriates get the opportunity to invest in both savings certificates and bonds.

He said it will be easier to track whether an expatriate is investing beyond the consolidated investment limit. . From now on, it will be easier to track whether someone is investing beyond the consolidated investment limit."

He said expatriates will require a NID to buy the bonds. Steps are being taken so that any expatriates who do not have the document can collect it from the embassies in their respective countries.

Investment in Wage-Earner Development Bonds starts from Tk25,000 with a maximum limit of Tk1 crore. The five-year bond offers a maximum of 12% interest rate on maturity for investments up to Tk15 lakh; 11% for above Tk15 lakh to Tk30 lakh; 10% for above Tk30 lakh to Tk50 lakh; and 9% for above Tk50 lakh to Tk1 crore.

The bond, launched in 1981, can be bought by a legal wage earner (expatriate) or his nominee living in Bangladesh using local or foreign currency. Officials working in Bangladesh's missions in foreign countries can also invest in the bond.

Meanwhile, expatriates can also invest in the US Dollar Premium Bond from a minimum of $500 to a maximum of $50,000. Non-resident Bangladeshis or Bangladeshi-born nationals can buy the bond with a three-year maturity period. It offers a 7.5% interest at the end of the maturity, with 6.50% and 7% interest at the end of the first and second year respectively.

The US dollar investment bond is also available at the same price and can be bought by both non-resident Bangladeshis and Bangladeshi-born nationals using US dollars. The three-year bond offers a 6.5% interest at the end of maturity.

Both the US Dollar bonds were launched in 2002. An investor in these bonds is offered 15% to 25% death-risk-benefit, the interest of which is paid every six months.

The money invested in these three bonds and the profits earned is income tax-free. These bonds also have loan facilities against them. Furthermore, they provide the facility of investing in multiple periods.

According to data from the Bangladesh Bank, the total investment in three types of expatriate bonds till last June stood at Tk14,838 crore. The bulk of this investment is in five-year Wage Earner Development Bonds with 12% interest. Till last June, the amount invested in this bond was Tk12,365 crore, which amounts to 83.33% of the total investment.