Published:  02:01 AM, 18 July 2017

Savings certificate interest cut likely

The government is going to reduce rate of interest on savings certificates as International Monetary Fund (IMF) has been exerting pressure to cut interest rate on savings tools for a long time.  The rate of interest on bank deposit has been steadily decreasing. Currently the rate on term of bank deposit is single digit i.e., below 5 percent which was previously double figure.

The government is also going to change investment policy in savings certificates. Earlier, a retired government employee was getting double digit interest on savings tools. Now the concerned department is going to fix signal digit rate of interest on their deposit. The low-and middle-income group of people in the country mainly invest in banks, financial institutions and savings instruments. Especially, the elderly and the fixed income earners would like to buy savings certificates through their deposit means. And a part of the monthly expenditure is earned from the tools.

According to the finance ministry, most customers are losing interest in bank deposits due to small rate of interest. The Bangladesh Bank data show the rate of interest on bank deposit is currently 5 percent. But the rate of interest on the savings tools is above 11 percent. Currently the government is providing 11.52 percent rate of interest on
five-year duration of family savings certificates.

Salma Khatun of Mirpur said she had come to buy a family savings certificates. She already bought Tk  500,000 worth of savings certificates in last three month. She also said, "The government is going to reduce rate of interest on savings certificates. Before taking the step on savings certificates she would like to buy savings tools worth Tk 900,000."

Professor Abu Ahmed, Economic Department of Dhaka University, said, "In recent time the government has reduced the rate of interest on bank deposit. As a result, a huge number of customers are turning to savings tools." He further said, "Many persons are depending on the interest of savings certificates. If the government cuts interest rate, they will be seriously affected as a portion of the monthly expenditure of their family comes from the certificates."

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