11.28% interest on postal savings again from March 17

Finance Minister AHM Mustafa Kamal said on Wednesday that the government will restore the interest rate for postal savings from March 17.

The interest on three-year fixed deposits in the post office was reduced to 6 percent from over 11 percent two weeks ago. But it will be raised again to the previous level of 11.28 percent next month. 

"We reduced the interest to restrict affluent people from investing in postal savings," he said. 

The minister was speaking at a press conference after a meeting of the cabinet committee on government purchase at the Bangladesh Secretariat.

The meeting approved the purchase of fertiliser and development material worth over Tk2,000 crore.

The minister further said the government plans to form a commission to oversee the operations of the banking sector. "But it will take time."  

Former finance minister AMA Muhith in February 2017 said, "Initially, I opposed the idea of forming a banking commission. But now we feel that it is needed for the betterment of our financial sector."

In the face of widespread criticism, Mustafa Kamal last week hinted at reviewing the decision on interest for postal savings.

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 interest 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.

Currently, the post office offers three types of savings tools – fixed deposits, savings deposits 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 started bringing the interest on fixed deposits 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 total deposits, of which fixed deposits amounted to Tk11,726 crore.

The finance minister on Wednesday said, "We have already automated the processing of savings certificates, and we will do the same for postal investments by March 17."

 "The same people will not be able to invest in savings certificates and postal savings at the same time. Their TINs and national identification numbers are preserved in the system," he added.

A person can invest a maximum of Tk30 lakh in postal savings, and no documents are required for Tk2 lakh investments, he said.

The government will set up a central effluent treatment plant on 30,000 acres of land in the Bangabandhu Sheikh Mujib Industrial City in Chattogram. But the cost of the project has not been estimated yet. 

"About 15 lakh people will benefit directly and 30 lakh indirectly after the industrial area comes into operation," the finance minister said.

The government has also decided to purchase Di-Ammonium phosphate fertiliser worth Tk1,329 crore from Saudi Arabia.
 
Diesel and JET A-1 fuel worth Tk160 crore will be imported from Indonesia. The cost per barrel of diesel and of JET A-1 fuel is $2.95 and $3.95 respectively.

Tk332 crore will be spent on constructing the four-lane Jatrabari-Demra highway. 

The government will also appoint a consultant for e-Government procurement related training. Tk40 crore will be spent on that project.