Staff Reporter :
Net sales of national savings certificates (NSCs) fell into negative territory during the first ten months of the current fiscal year (FY25), as higher repayments outpaced new investments-largely due to sustained inflationary pressures and shifting government borrowing strategies.
According to data from the Bangladesh Bank, net NSC sales stood at negative Tk 7,431 crore during the July-April period of FY25. This figure reflects the difference between total sales of Tk 55,991 crore and repayments amounting to Tk 63,423 crore.
Bankers and analysts attribute the decline to persistently high inflation, which has significantly reduced disposable incomes, discouraging small savers from reinvesting in savings tools. Data from the Bangladesh Bureau of Statistics shows that inflation stood at 9.17 per cent in April, marking over a year of inflation remaining above the 9 per cent mark since March 2023.
“With household budgets increasingly strained, many savers are liquidating their previous investments rather than opting for new certificates,” said one senior banker.
In addition, rising interest rates on treasury bills and other banking instruments have made NSCs relatively less attractive. Treasury bill yields have surged to nearly 12 per cent, prompting investors to shift toward these higher-yielding and more flexible instruments. Many institutions are now favouring government treasury bills and bonds over NSCs.
Facing growing debt servicing costs associated with NSCs, the government has prioritised repayments over fresh borrowing from this comparatively expensive funding source. Despite initially targeting Tk 1.37 lakh crore in total borrowing for FY25-including Tk 21,000 crore from non-bank sources and Tk 12,500 crore from NSCs-weak NSC performance and the appeal of higher bank rates have pushed the government to rely more heavily on the banking sector.
Consequently, borrowing from commercial banks surged to Tk 82,056 crore over the same July-April period, deepening the liquidity challenges already confronting the financial sector.
Nonetheless, the months of March and April showed a modest recovery in NSC performance, with net sales reaching Tk 80.55 crore and Tk 1,260 crore, respectively. This rebound is seen as a response to tightening liquidity in the banking sector, prompting the government to revive its reliance on NSC borrowing.
The overall trend, however, has been downward over recent years. Net NSC sales recorded a negative Tk 21,124 crore in FY24 and negative Tk 3,295 crore in FY23. Experts also point to policy changes and tighter regulatory requirements as contributing factors.
In September 2021, the government reduced NSC interest rates by 1 to 2 percentage points and introduced stricter compliance measures-including mandatory submission of national ID and tax return documentation for investments exceeding Tk 5 lakh-which have made purchasing savings certificates more cumbersome.
For the upcoming fiscal year (FY26), the government has set a borrowing target of Tk 12,500 crore from NSCs, representing a 10.7 per cent reduction from the revised target of Tk 14,000 crore for FY25, reflecting a more cautious approach amid evolving fiscal and economic pressures.
