Profits under savings schemes of the National Savings Directorate are set to rise as the finance division of the finance ministry on Wednesday appealed to Internal Resources Division (IRD) to issue a notification about the new rates.
The new rate will be from 12.25 per cent up to 12.55 per cent, based on the type of savings scheme.
The finance division told the IRD that the chief adviser of the interim government has given his approval to the proposal prepared by the finance division. The proposal was made by the Cash and Debt Management Committee (CDMC), led by the finance secretary, with the assistance of the treasury and debt management wing of the finance division.
Asked, IRD secretary Md Abdur Rahman Khan said he was abroad but he knew the work on this was going on.
He also said he supports the initiative to increase the rate of profit for savings certificates in keeping with the interest rate of treasury bonds.
The letter sent to IRD said the interest rate for the savings certificates will be fixed, aligning with the interest rate of treasury bonds of 5-year and 2-year terms. However, to fix the new profit rate, the last six auctions of treasury bonds will have to be kept in mind. The finance division has also calculated the six months’ average interest rate for the bonds. The rate is from 12.25 to 12.37 per cent.
As per the letter, the new rate will be in place for six months, from 1 January and June. A new rate will be fixed after six months for the July-December period.
The new rate will be applicable only for the new investors.
Currently, there are nine schemes in operations under the National Savings Directorate. Those include a 5-year term, profit after every three months, pensioner certificates and family certificates. Besides, there are postal savings bank general accounts, and postal savings bank term accounts.
Apart from those, there are three types of bonds for the expatriates - wage earners development bond, US Dollar investment bond and US Dollar premium bond. The letter did not say anything about changes in the bond’s profit rate though those three are also savings schemes.
The finance division sent two attachments with the letter that mentioned the profit rates based on the types of savings certificates and terms.
An analysis shows the lowest profit rate will be 12.25 per cent, for the postal savings bank and the highest rate will be 12.55 per cent for the pensioner scheme. The finance division has also proposed a higher rate for the people with less than Tk 750,000 investment in savings certificates.
Two slabs of investors
The letter also spoke about bringing changes in slabs of investors. Currently, there are three slabs - up to Tk 1.5 million, then up to Tk 3 million and in the third slab over Tk 3 million, with different profit rate for each slab.
But the newly proposed slabs would be just two - up to Tk 750,000 in the first slab, and in the second slab, those with more than Tk 750,000 investment.
For example, those who would invest Tk 750,000 in 5-year term savings certificates would get a profit at the rate of Tk 12.4 while those with above Tk 750,000 would receive Tk 12.37.
The same principle would apply for all other schemes, with the highest benefit for the pensioner scheme holders. For them, the profit rate would be Tk 12.55 per cent and Tk 12.37 per cent for the two slabs.
Though it has been said that the new rate will be applied from 1 January, already eight days of the new year have elapsed. People have already invested and some more are doing so. So how long would it take the IRD to issue the notification?
Speaking about those issues, a source in the finance division said they will find a way for this. Besides, the previous system will be cancelled when the IRD will publish a new notification.
Former chief economist at Bangladesh Bank, Mustafa K Mujeri told Prothom Alo, the government has taken a reasonable decision of increasing the profit rate for savings certificates since the interest rate of both the treasury bonds and bank deposits is higher now.
The government could take the decision also because of the shortfall of revenue income, he added.
* The report, originally published in the print edition of Prothom Alo, has been rewritten in English by Shameem Reza