Finance ministry revises regulations governing NSCs
The finance ministry has revised existing regulations governing the national savings certificates through lifting the current investment limits in the national savings tools and accepting those as collaterals against bank loans. Finance Minister AMA Muhith approved the new rules on Sunday to attract savers and boost the sales of savings certificates to finance its budget deficit and reduce the government’s over-dependence on bank borrowings, sources in the finance division of the ministry said.
The new rules have been okayed as per a government-commissioned report that also suggested the government for taking a number of measures including hike in yield rates of savings tools and withdrawal of existing tax at source to be deducted from the earnings of the instruments.
However, Muhith did not accept proposals on yield rates and tax exemption amid opposition from Bangladesh Bank (BB) and the National Board of Revenue (NBR), a senior finance official said.
The circular on new regulations would be issued next week.
‘The major objectives of the revised regulations are to boost the sales of savings certificates and uphold the interests of savers keeping the business prospects of the scheduled banks and revenue prospects of the government in mind,’ the official, who deals with the matter, told New Age on Thursday.
According to the new criteria, the existing maximum investment ceilings of Tk 30 lakh for single individual and Tk 60 lakh for joint accounts for five-year Bangladesh Sanchayapatra and three-monthly Shanchayapatra have been revised to Tk 50 lakh and Tk 1 crore respectively.
Besides, provision of obtaining permission from the tax department now mandatory for the local government bodies like city corporations before investing in the savings tools has been waived 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 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 has been re-introduced as the provision was scrapped about a decade ago 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 encourage many to invest in savings instruments.
Both individuals and businesses will get the collateral facility against their savings tools.
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.
However, the current maximum investment ceiling of Tk 50 lakh for Pensioner Shanchayapatra scheme will remain unchanged under the revised policy, a finance official told New Age on Thursday.
According to the new directives, a ‘Help Line’ would be introduced to provide proper services to clients, Monitoring Committees will be formed at divisional and district levels and automation be introduced to facilitate savers.
-With New Age input
