Kamruzzaman Bablu :
Due to the steep rise in daily commodity prices, the sales of national savings bonds have significantly declined, as those with fixed incomes are depleting their hard-earned savings to cope with recent expenses.
Many are liquidating their savings bonds, originally purchased with hopes for a secure future, to cover family expenses.
For the past two years, there has been a noticeable trend of customers cashing in their savings bonds.
Investments in savings bonds saw a sharp decrease in December and November 2023.
The authorities were compelled to pay bond buyers more as many opted to cash in their savings instruments.
According to the most recent report published by Bangladesh Bank, the principal interest payment in the sixth month of the current fiscal year 2023-24 exceeded sales by Tk 2,204 crore and 32 lakh.
This means that the net sales of savings certificates fell by Tk 2,204 crore and 10 million compared to December 2023.
The trend of declining sales was also observed in December 2022, where the principal interest payment exceeded sales by Tk 1,490 crore and 10 million, resulting in a net sales drop of Tk 1,490 crore and 94 lakh.
Industry insiders point out that the cost of daily necessities continues to rise, while people’s incomes are not increasing proportionately, impacting their ability to save.
Particularly affected are those relying on fixed incomes, with many breaking into their savings. Restrictions have also deterred many from investing in savings certificates, leading to disappointing sales figures in this sector.
The BB report highlights a negative trend in the sale of savings bonds for the first six months (July-December) of the fiscal year 2023-24, with net sales amounting to a negative Tk 6,063 crore and 23 lakh.
This indicates that more was paid out than received from sales. A similar negative trend was observed in the first six months of the fiscal year 2022-23, with Tk 3,106 crore and 85 lakh more paid out than received from sales.
The report also notes that in November 2023, sales continued to decline, with principal interest payments exceeding sales by Tk 1,553 crore.
In October, the fourth month of the fiscal year 2023-24, the net sales of savings bonds decreased by around Tk 1,040 crore, with principal interest payments surpassing sales by the same amount. September saw a decrease of about Tk 148 crore in net sales.
However, the beginning of the fiscal year showed an increase in sales, with net sales of Tk 3,250 crore in July and Tk 2,312 crore and 33 lakh in August 2023.
Yet, sales took a downturn in September. In the fiscal year 2022-23, savings bonds sold amounted to Tk 80,858 crore and 6,20,000 over 12 months, against which Tk 84,154 crore and 56 lakh had to be paid as principal interest, leading the government to cover a shortfall of Tk 3,295 crore and almost 10 million with loans from the treasury and banking system.
For the current fiscal year 2023-24, the government planned to borrow Tk 18,000 crore through the sale of savings bonds, which is 48.57 percent or Tk 17,000 crore less than the previous year.
An official from Bangladesh Bank, who wished to remain anonymous, told The New Nation that the sale of savings certificates has been on a downward trend for several months, attributed to customers cashing in their bonds more frequently due to the soaring prices of commodities.
‘Despite the normal supply of daily commodities in the market, the authorities do not control the high price of these essentials. As a result, commoners, particularly the fixed income group people, were bound to encash their savings like savings bonds or bank deposits.
It is not a good sign for a stable economy,” Dr AB Mirza Azizul Islam, former finance adviser to the caretaker government, told the New Nation.