Nat’l Savings Tools
Govt borrowing target may rise by Tk 2,000cr
Borrowing target from national savings certificates for the current financial year may be revised by up to Tk 2,000 crore on the original estimate of Tk 4971 crore, with investors rushing to buy high-yielding savings instruments. Finance ministry officials who monitor government borrowing trend throughout the year for financing the budget deficit, said that net borrowing from the savings tools in July–January had grown five times year-on-year.
Low bank interest and the latest regulation revision favouring investment in savings tools are two major factors that are pushing savings instrument sales, finance officials said.
‘Sales of savings certificates of almost all types registered a phenomenal growth,’ a finance official told New Age, saying that the upward revision might be made to benefit savers and not to meet enhanced expenditure as happened earlier.
The latest data show that sales of savings certificates, which fall under the non-bank borrowing category, in the first seven months of the 2014 financial year has marginally exceeded the yearly target of Tk 4,971 crore.
‘We need to revise the target up to Tk 7,000 crore,’ an official said, adding that the bank borrowing target might not be revised upward this time as borrowing from the sector as of February 20 was only Tk 3824 crore against the target of Tk 25,993 crore.
‘We are comfortable with the trend of borrowing from the banking sector as development expenditure has been slow in July–January,’ the official said.
The revision of borrowing from the banking and the non-banking sector would be decided towards the end of March.
Banking sector officials said that interest rates on bank deposits had been cut by 2–3 per cent on an average in three months given the huge deposit lying with banks amid sluggish demand for lending.
They said that the highest interest rate banks now offer is 11 per cent while the yield rate for savings tools is 13 per cent.
Finance officials said that the latest revision made in the regulations on savings tools had increased their sales.
The finance ministry in October 2013 increased the maximum investment ceilings in savings tools from Tk 30 lakh to Tk 50 lakh for individuals and from Tk 60 lakh to Tk 1 crore for joint accounts.
Provision of obtaining permission from the tax department that was mandatory for local government institutions such as city corporations before investing in the savings tools has been waived to encourage institutional investments and end bureaucratic formalities.
-With New Age input
