Govt savings tools take Tk3,100cr hit amid inflation

People withdrew more money than new investments in the National Savings Certificates in the first half of the current financial year.

People concerned said the recent dollar crisis in the country affected inflation and employment. The cost of living of people increased despite their income remaining the same. As a result, people are spending their savings to survive in the tough economic situation, they added.

According to the latest data of the Bangladesh Bank, in July-December 2022-23 FY, Tk40,471 crore was invested in the National Savings Certificates. However, during the same period, Tk43,578 crore was withdrawn. That means people withdrew Tk3,106 crore more than their savings.

In the same period of the previous fiscal, investments in the savings certificates increased by around Tk10,000 crore.

In the first half of 2021-22 FY, people invested Tk51,632 crore in savings certificates and withdrew Tk42,042 crore. The amount of investment was Tk9,589 crore higher than the amount withdrawn.

In the current fiscal, the government has a net borrowing target of Tk35,000 crore from the savings certificates.

Bankers said the government has made TIN certificates mandatory for buying savings certificates of more than Tk5 lakh, which is discouraging people from investing here.

Besides, the import of capital machinery and construction of new factories declined in the country due to the dollar crisis. Many people are withdrawing their savings as new employment is not created in this situation.

Meanwhile, as per the central bank data, deposit growth in the banking sector has also declined in the current fiscal.

In November 2022, banks achieved a deposit growth of 6.68% while it was around 10% in the same period of the previous year.

Mohammad Shah Alam, director of the National Savings Directorate, told The Business Standard, "The decline in the investment in savings certificates reflects the current market situation. The prices of all kinds of goods have increased in recent times but people's income has not increased. So they are spending more money than saving in savings certificates."

"Generally middle class people invest in savings certificates. Besides, there are some women who also invest here with the money given by their children or family members. But now, they need a TIN certificate to invest more than Tk5 lakh," he added.

A managing director of a bank said on condition of anonymity that the government is under pressure from the International Monetary Fund (IMF) to increase revenue by reducing deficit which could have impacted the decline in the investment in savings certificates.

Besides, the reduction in interest rates in all kinds of savings certificates could also be another reason.

According to the Bangladesh Bureau of Statistics (BBS), the household expenses of people in the country have increased compared to their income in recent times.

BBS data show, the point-to-point (monthly) inflation rate in September 2022 was 9.10% which was 9.53% a month earlier. However, the inflation rate declined to 8.85% in November and 7.71% in December of the same year.

On the other hand, the wage rate index in September was 6.86%, in October 6.91%, 6.98% in November and 7.03% in December 2022.