Interest rates cut on savings certificates won’t affect marginalised investors: Finance minister

Finance minister AHM Mustafa Kamal
BSS file photo

Finance minister AHM Mustafa Kamal on Wednesday said that the recent interest rates cut on savings certificates would not affect the small and marginalized investors, reports BSS.

“With this cut in interest rates, the marginalized people and also those who keep small investment in savings certificates won’t be affected,” he said.

The finance minister said this today while replying to a question during his briefing after the meetings on Cabinet Committee on Economic Affairs (CCEA) and the Cabinet Committee on Government Purchase (CCGP).

He said usually the savings certificates target the marginalized people and also the pensioners, but in recent times the government has noticed that all are coming to these savings tools due to the comparatively higher interest rates. “If such a trend continues, then the other drivers of the economy will become stagnant,” he added.

Kamal said although the interest rates on savings certificates have been slashed, but there was no cut on the rates with investment of up to Tk 1.5 million (15 lakh) considering the marginalized section of people. “But, still the interest rates of savings certificates are higher than other deposits now prevail in market,”

The new rates will not affect the present investment and will only be applicable for fresh investments.

According to the new rules, which came into effect yesterday, the higher the investment amount, the lower the returns will be. If the investment amount is higher than Tk 1.5 million (15 lakh), investors will get a lower interest rate, according to a circular of the Internal Resources Division (IRD) of the Ministry of Finance.

Asked whether the government wants to discourage people towards savings tools, Kamal said the government wants to motivate those sections of people to savings tools who actually require those.

Citing an example, he said that the government does not want anyone to invest Taka 1 crore in savings certificates, rather the investment could range between Tk 100,000 to Tk 3 million (30 lakh) and through this no one would be affected.

The finance minister said the recent cut in interest rates has been made considering the rates of deposits in other banks, and also the interest of the marginal investors.

He, however, informed that rationalization of the interest rates of the savings certificates is an ongoing process and the rates might go up or go down.

In the last fiscal year (FY21), savings certificates worth Tk 1121.88 billion (112,188 crore) were sold, up 67 per cent year-on-year.

Net sales of the savings certificates were Tk 419.59 billion (41,959 crore) and its growth was 190 per cent year-on-year, according to the data of the Directorate of National Savings.

The government has allocated Tk 620 billion (62,000 crore) for the current fiscal year to pay interest on domestic borrowings, up from Tk 582.53 billion (58,253 crore) in the previous budget.

Asked about the mushrooming of the e-commerce firms, Kamal said that such e-commerce firms often appear before the country and people and thus tend to cheat with the commoners.

He said the concerned ministries, divisions, and agencies should take responsibility to deal with the issue.

Replying to another question about the progress on the government’s move to the decentralization process, Kamal said that the government wants people to stay where they remain, especially in the rural areas to lessen pressure on the capital.

For this, he said there is necessary to increase manifold the rural infrastructures and civic facilities for which the government has been working tirelessly.