Savings certificates sales exceed Tk500cr again in May FY23

Savings certificates sales crossed the Tk500-crore mark for the second time in May of the recently ended FY23.

According to the Bangladesh Bank data, savings certificates worth Tk551 crore were sold in May. Earlier, savings certificates worth TK581 crore were sold in April this year. For those two consecutive months customers purchased more savings certificates than they redeemed.

The net sales of saving certificates for the first 11 months of FY23, however, stood negative at Tk3,029 crore as the government borrowed some Tk74,700 crore against the repayment of Tk77,700 crore during the period.

A senior official of the central bank said a lot of negative reports were published about the banking sector at the end of last year. At that time, banks faced a pressure of withdrawing deposits. People were more attracted to savings certificates in that situation.

Besides, customers get a slightly higher interest rate from savings certificates than they get from the deposits in banks. That too contributed to the rise in the sale of the savings certificates, he said.

Pointing out that more savings certificates were redeemed than bought in FY23, the official said "The government has been paying a higher interest rate against saving certificates than that against the money borrowed from the banks. Now, it is reducing borrowing from the banking sector to decrease the interest costs and follow the International Monetary Fund's advice,"

The government set a target of borrowing Tk35,000 crore from the savings tools in FY23, which was later reduced to Tk20,000 crore. 

According to the finance ministry, the interest costs for savings tools were initially estimated at Tk42,675 crore for FY23, which was later increased to Tk45,100 crore in the revised budget. 

Meanwhile, the scope for investment in saving certificates is set to be squeezed further as the government has cut the target of borrowing from the tools by 49% year-on-year to Tk18,000 crore for FY24, according to finance ministry officials.