Post office savings certificate interest slashed to half

Staff Correspondent . Dhaka | Update:

Prothom Alo illustrationThe government has slashed interest rates on post office saving certificates (Dakghar Shanchaya Patra) to half in order to discourage investment in the instrument. Interest on the three-year savings certificate is now 6 per cent, which had so long been 11.28 per cent.

In a circular released by the Internal Resources Division of the finance ministry on Thursday, the profits of those investing in these savings certificate will down go down by half. The new interest rate has come into effect from yesterday, Thursday. This reduced interest rate does not apply to other savings certificates.

According to the circular, the interest for one year has been set at 5 per cent, which was previously 10.20 per cent. For two years it is 5.50 per cent, previously 10.70 per cent. And for three years the interest is now fixed at 6 per cent.

The investor may collect the profit every six months, for which he will get 4 per cent in the first year, 4.50 per cent in the second year and 5 per cent in the third year. Previously this was 9 per cent, 9.50 per cent and 10 per cent in the first, second and third years respectively.

According to the National Savings Department, net investment in the post office savings certificates in 2018-19 was about Tk 80 billion. Of this, Tk 75 billion was invested in the three-year term certificates.

The government has taken various measures to discourage investment in savings certificates. Tax at source on saving certificates this year has gone up from 5 per cent to 10 per cent. This tax has also been imposed on fixed deposit bank accounts. For those with no TIN, the rate is 15 per cent.

These steps have sent down sales on savings certificates. In the first five months of 2019-20 fiscal, there was a one-third fall in sales of savings certificate compared to sales in the corresponding period of last year. Net sales of savings certificates were around Tk 3.20 billion, which was Tk. 3.83 billion in the corresponding period last year.

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