The finance ministry plans to revise the existing regulations governing the national savings certificates through lifting the current limits on investment in the savings tools and accepting those as collaterals against bank loans. The move, aimed largely at curbing the government’s over-dependence on bank borrowings to finance its budget deficit and attract savers, came after recent Bangladesh Bank (BB) opposition to a planned hike in yield rates of savings tools and strong reservation expressed from the revenue board on withdrawing tax at source from their interest income, sources in the ministry said.
The new regulations expected to be issued at the end of the current month would boost the sales of savings tools with paying adequate heed to the economic concerns of central bank and the National Board of Revenue, hoped a senior finance official.
‘The major objectives of the move are to boost the sales of savings certificates and uphold the interests of savers with keeping business prospects of scheduled banks and revenue prospects of the government in mind,’ the official, who deals with the matter, told New Age.
According to the move, the current maximum investment ceiling of Tk 50 lakh for Pensioner Shanchayapatra scheme will be lifted to sooth the woes of the retired public employees caused largely from soaring inflationary trend.
The revised ceiling is, however, yet to be finalised.
As per the plan, the existing maximum investment ceilings of Tk 30 lakh for five-year Bangladesh Sanchayapatra and three-monthly Shanchayapatra are set to be raised to Tk 50 lakh for single individual and Tk 1.0 crore from the current ceiling of Tk 60 lac for joint individuals, sources confirmed.
The new ceiling for Poribar Shanchayapatra is likely to be fixed at Tk 75 lakh from the current threshold of Tk 45 lakh.
Besides, provision of obtaining permissions from the tax department now mandatory for the local government bodies like city corporations before investing in the savings tools is going to be scrapped soon to encourage the institutional investment and end the bureaucratic formalities.
The BB recently opposed a plan of the government to increase interest rates of national savings certificates saying that the proposed measure will hurt the business of banks as their cost of obtaining funds will increase.
Earlier, the National Board of Revenue (NBR) raised their objection while the Finance Division within the finance ministry had sought to withdraw the existing 5.0 per cent tax at source from the interest income deriving from the savings tools.
To encourage the individuals to invest in the national savings certificates, the collateral system against bank loans would be re-introduced as the provision was scrapped about a decade before amid some irregularities, sources said.
‘The re-introduction of collateral system will equate the bank loans facilities now available for individuals and institutions against their term deposits in banks and other financial institutions,’ a finance ministry official said, adding the proposed measure would drive many to invest in savings instruments.
Currently, bank interest rates on term deposits range between 10 and 12.5 per cent, while yields rates of the two–year and five-year Treasury Bonds are between 10 and 12 per cent.
The borrowing of the government from the savings tools was only Tk 772 crore in the last fiscal year against the target of Tk 7,400 crore.
The government set the net borrowing target from the savings certificates at Tk 4,971 crore for the current fiscal year.
-With New Age input
