No e-tin needed to buy savings certificates worthTk2 lakh

No e-tin will be needed to purchase savings certificates, or to open postal savings accounts, worth Tk2 lakh or less.

Finance Minister AHM Mustafa Kamal stated while placing the proposed budget for the new financial year in Parliament on Thursday.

"At present, e-tin is needed to buy savings certificates worth over Tk1 lakh. The limit for buying savings certificates without e-tin has been extended with the aim of encouraging small savers to invest," he said, adding that the e-tin, or tax identification number, will be required if one purchases savings certificates or postal savings worth over Tk2 lakh.

Welcoming the initiative, Syed Abu Naser Bakhtiyar Ahmed, former managing director of Agrani Bank, told The Business Standard that most small investors are not subject to income tax. So it is difficult for get the e-tin.

He thinks that this initiative will encourage small savers to invest in savings certificates and get good returns. At present, the interest rate on bank deposits is so low that savers are reluctant to deposit their small savings in banks.

Taufiqul Islam Khan, senior research fellow at the Centre for Policy Dialogue (CPD), also termed it a good initiative. He hoped the move will encourage small savers.

However, to reduce government expenses on interest of savings certificates, or, in other words, to discourage investment in savings certificates, he suggested setting investment limits, similar to individual investors, for institutional investors also. He also stressed an increase in monitoring so that one cannot buy savings certificates under different names, or more than the limit.

Last December, the investment limit was set to discourage the purchase of savings certificates. Except in the case of pensioner savings certificates, more than Tk50 lakh cannot be invested individually, and more than Tk1 crore jointly in three other types of savings certificates.

Earlier, the individual limit was Tk1.55 crore while the joint venture limit was Tk2.15 crore.

Although there is an investment limit for individual purchase of five-year term Bangladesh Savings Certificates, there is no investment limit at institutional levels.

At present, there are four types of savings certificates —Bangladesh Savings Certificates of five-year terms, family savings certificates, profit-based savings certificates of three-month terms and pensioner savings certificates. There are also postal savings certificates. The profit rate of these savings certificates varies from 9% to 11.5%.

If one has a fixed deposit (FDR) in the bank, one can take out a loan of up to 80% on a two-day notice in case of emergency. But no bank loan can be taken against the security of savings certificates.

Duplicate copies of savings certificates can be obtained through necessary formalities if certificates are lost, stolen, burnt or damaged in any other way.

No profit is paid on any type of savings certificate if one wants to redeem it before one year. Only the invested amount of money is refunded.