Home Today's Paper Most Popular Video Gallery Photo Gallery
Subscription Blog Signin Register
Logo
Friday, April 19, 2019 01:24:18 AM
Follow Us On: Facebook Twitter Twitter Twitter Twitter

Avoid savings tools as prime borrowing source

By
13th-Jan-2018       
Comments
Share your thought
Post a comment »
Read all () »

SAVERS' appetite for high-yielding schemes shows no sign of fading as net sales of savings certificates rose 4.19 percent year-on-year basis in the first five months of the fiscal year. A national daily reported that in the July-November period, the government's borrowing through the savings instruments was more than 70 percent of the entire fiscal year's target of Tk 30,150 crore.
The attraction of the savings tools is their interest rates -- 11.04 to 11.76 percent -- ways higher than the 7 to 8 percent offered by banks on fixed deposits. The increased  selling of the savings tools is a safe choice for the retired and women as the banking system under this government drastically lost people's trust but at the end it emits a bad signal for the economy in general due to rising government expenditure. Rebuilding trust in banks and ensuring investment friendly environment can divert people to opt for other mode of investment.
In fiscal 2016-17, net sales of savings tools hit an all-time high of Tk 52,327 crore, more than 2.5 times higher than the government's target of Tk 19,610 crore. Insiders of Bangladesh Bank said that the trend will continue this year also if the government does not slash the rates. This form of borrowing is pushing up the government's expenditure. Because of the large sales, the government's net borrowing from the banking sector went into the negative in the first quarter of 2017-18. The government borrowed Tk 2,132.3 crore and repaid Tk 5,270.2 crore, taking its net borrowing to Tk 3,137.90 crore in the negative.
Commercial banks have recently increased the rate of interest on their deposit products because of a shortage of liquid funds. Some banks have also adopted an "aggressive lending" policy causing much concern to the central bank as such trends left an adverse impact on their liquidity base. In November, private sector credit growth stood at 19.06 percent, far beyond the target of 16.2 percent set by the central bank for the first half of the fiscal year. Against this backdrop, the banks will increase the rate on their deposit products in the months to come to alleviate the liquidity crunch. The sales of savings tools may decrease when the rate on banks' products will go up. On the other hand, we can say investment in the savings instruments would increase further in the coming days as depositors' confidence in the banking sector has eroded because of frequent financial scams.
The higher rates on the savings tools are encouraging investors to park their money in the instruments which will create a mismatch for the government in dealing with deficit financing. The government should not slash the interest rates on the savings certificates because the tools are mainly bought by middle and lower-middle income groups. But the government should stop the sales of savings tools when its budgetary target is met.

Tariff
Add Rate

News Archive

Inside The New Nation

Cricket »

Sri Lanka dump Chandimal, bring back Thirimanne for World Cup


AFP, Colombo :Sri Lanka Thursday dumped established stars including former captain Dinesh Chandimal to hand batsman Lahiru Thirimanne and leg-spinner Jeffrey Vandersay a place in their World Cup squad.Chandimal, who was one-day captain until last October, wicketkeeper-batsman Niroshan Dickwella, off-spinner Akila Dananjaya, openers Danushka Gunathilaka and Upul Tharanga were all ...

Cricket »

Senior players need to take the responsibility: Faruk Ahmed


Former chief selector Faruk Ahmed insisted on the performance of the senior players, stating that they need to take the onus if Bangladesh want to do well in the upcoming ICC Cricket World Cup.According to Faruk, the condition should give Bangladesh a confidence, given that they stormed into the semifinal ...

Entertainment »

Mehazabien’s Boishakhi works create viewers’ attention


Sheikh Arif Bulbon :For the last few years, Mehazabien Chowdhury established her strong position in media by virtue of her acting quality and skill. She is now getting positive response for acting in two Boishakhi plays. Afran Nisho was her co-actor in these two plays - Tom & Jerry and ...

International »

Turkish opposition takes control of Istanbul, re-run appeal still pending


Reuters, Istanbul :Turkey's main opposition candidate took office as Istanbul mayor on Wednesday after a stunning victory over President Tayyip Erdogan's AK Party, but the new head of the country's largest city still faces an appeal for the vote to be re-run.The final result of the March 31 local elections ...

Editorial »

Power politics in Egypt


A HUGE majority of Egypt's MPs on April 16 approved constitutional amendments to allow President Abdel-Fattah al-Sisi in power until 2030. The amendments were initially introduced in February, however after lengthy debates and discussions favouring the Egyptian society it was updated earlier this week. "The president's current term shall expire ...

Football »

Iniesta's J-League club Kobe part ways with coach Lillo


AFP, Tokyo :Barcelona legend Andres Iniesta's Vissel Kobe have terminated the contract of manager Juan Manuel Lillo following a poor run of results, the Japanese club said on Wednesday.The 53-year-old former Real Sociedad and Zaragoza boss won just two of six games since taking charge last October as star-studded Vissel ...

International »

US waging 'financial war' against Palestinians


AP, Ramallah, West Bank :The new Palestinian prime minister on Tuesday accused the United States of declaring "financial war" on his people and said an American peace plan purported to be in the works will be "born dead."In his first interview with international media since taking office over the weekend, ...

City »

Various organisations formed a human chain in front of Jatiya Press Club on Wednesday marking the International Krishok Sangram Dibash-2019.


Entertainment »

Priya Bapat to take up a web series


Web Series are surely the in thing nowadays and so many actors, irrespective of their stardom, are being seen in them. Marathi superstar Priya Bapat has also bagged a web series called City Of Dreams. Sharing her experience of being part of the series, she says, “Web series are now ...

Editorial »

Urgent steps needed to check outbreak of diarrhoea


AT the advent of summer this year, the number of diarrhoea patients has already crossed the recent records. International Centre for Diarrhoeal Disease Research, Bangladesh, and the other city hospitals are struggling to tackle the surge in diarrhoea patients. The diarrhoea patients admitted to the ICDDR,B has crossed the number ...

Cricket »

Tearful Taskin vows to make a strong comeback


Fast bowler Taskin Ahmed vowed to make a strong comeback after being snubbed from the 15-member World Cup squad, announced by the Bangladesh Cricket Board (BCB) on Tuesday.Chocked with emotions as tears were rolling down from his cheek Taskin shared his disappointments with media."Its' ok just pray for me," Taskin ...

Editorial »

Save the state-owned jute mills


WORKERS of state-owned jute mills across the country withdrew their 96-hours strike last night after the Bangladesh Jute Mills Corporation (BJMC) agreed to some of their demands. The decision came after a meeting between worker leaders and top BJMC officials on Monday night, following the first day of the second ...

International »

World leaders stunned by Notre-Dame fire, urge rebuilding


AFP, Paris :Global leaders and institutions shared the international shock at seeing Paris's Notre-Dame Cathedral consumed by flames.They stressed the unique and iconic place the monument has in human history and expressed solidarity with France. Pope Francis "is praying for French Catholics and for the people of Paris in face ...

City »

Prime Minister Sheikh Hasina visiting a stall at Bangabandhu International Conference Centre after the inauguration of National Health Service Week 2019 at Bangabandhu International Conference Centre yesterday.


Entertainment »

What motivated Priya Bapat to take up a web series?


Web Series are surely the in thing nowadays and so many actors, irrespective of their stardom, are being seen in them. Marathi superstar Priya Bapat has also bagged a web series called City Of Dreams. Sharing her experience of being part of the series, she says, `Web series are now ...

 
Items that you save may be read at any time on your computer, iPad, iPhone or Android devices.
 
Are you new to our website? Do you have already an account at our website?
Create An Account Log in here
Email this news to a friend or like someone
Email:
Write a comment to this news