The net sales of national savings certificates (NSCs) continued their downward trend in the first seven months of the current financial year, reflecting the impact of prolonged inflation and shifting investment preferences.
According to Bangladesh Bank data, the net sales of NSCs stood at a negative Tk 7,013 crore in the July鈥揓anuary period of FY25, slightly improving from the negative Tk 7,350 crore recorded in the same period last year.
However, in January alone, the figure sharply declined to a negative Tk 4,768 crore, significantly lower than the negative Tk 1,287 crore recorded in January 2024.
The negative net sales indicate that repayments of principal amounts have exceeded new sales, leading to a net outflow of funds from the government鈥檚 exchequer.
Experts and bankers attribute this to the financial strain caused by persistently high inflation, leaving people with little disposable income to invest in savings schemes.
The Bangladesh Bureau of Statistics reported that inflation remained high at 9.32 per cent in February, hovering above 9 per cent since March 2023.
As household budgets tighten, many savers are forced to rely on their existing savings instead of making new investments.
Besides, the central bank鈥檚 hike in bank interest rates has made deposit rates and treasury bond rates more attractive, reducing the appeal of national savings certificates for investors, bankers said.
Bankers said that people now preferred investing in government treasury bills and bonds due to their high-interest rate earnings, with treasury bill interest rates soaring to a hovering at 11 per cent.
In the last seven months, the government borrowed Tk 36,463 crore against the repayment of Tk 43,476 crore in the period.
The government amidst economic crises prioritised repayment over further borrowing through these instruments which bear high interest rates, according to bankers.
Therefore, the government did not receive funds from the sector in the past couple of years.
Bangladesh Bank data showed that net NSC sales were negative Tk 21,124 crore in FY24 compared with that of negative Tk 3,295 crore in the previous financial year FY23.
In FY22, the government received only about Tk 19,915 crore from the sales of NSCs, significantly lower than its target of Tk 32,000 crore.
Experts also attribute the decline in NSC investments to policy changes.
The government reduced NSC interest rates by 1鈥�2 per cent in September 2021 and imposed stricter purchase requirements, such as requiring national identification documents and tax return proofs for investments exceeding Tk 5 lakh.
Bankers say these measures discouraged many potential investors who preferred anonymity in their financial dealings.
Meanwhile, the government borrowed Tk 86,000 crore from commercial banks between July and January, further straining liquidity in the banking sector.
