Uncapping of interest rate: Term deposit in banks up, savings cert sale down


Staff Reporter :
The net sales of national savings certificates plummeted to a negative 1,287 crore in the first month of this year as Tk7,964 crore were sold in January.

However, Tk9,251 crore was paid as interest and principal of the certificates sold earlier.

According to the data from the National Savings Directorate, savings certificates worth Tk49,257 crore were sold in the July-January period of the current financial year.

On the other hand, during the same period, the government had to pay Tk56,506 crore as interest and principal.

However, term deposits in banks have registered a rebound, rising by Tk 189.3 billion to Tk7.8 trillion as of the fourth quarter of 2023, as uncapping interest pays off.

The interest rates of bank loans and deposits have been continuously increasing since the introduction of SMART rate, bankers said. As a result, money is entering banks from other sectors.

Official statistics show that the share of fixed deposits in the total bank deposits is gradually expanding as the interest rates on such deposits are on the rise, alongside their lending rates.


The share of fixed deposits to total deposits in the banking system increased from 44.25 per cent to 44.42 per cent in October-December 2023 compared to the previous quarter.

Meanwhile, Bangladesh has total deposits in the banking system worth Tk 17.5 trillion, as of the end of December 2023.

Currently, many banks offer more than 10 per cent interest on term deposits, and there are few banks facing liquidity shortages offering around 12 per cent on one-year-tenure term deposits, according to sector insiders.

Due to the reduction in interest rates and the imposition of various types of restrictions, the sale of savings certificates, the safest investment option for
the common man, has decreased, they added.

Regarding this issue, Md Mezbaul Haque, executive director and spokesperson of the Bangladesh Bank, said the interest rate on bank loans has been increased to control inflation. With this, the interest rate on bank deposits has also increased.

“That is why money has started entering the bank. Now the investment in saving certificates and other sectors will decrease significantly,” he added.