The government is likely to set up investment limits for potential buyers of national savings certificates along with a two-tier profit rate.
Buyers may also be required to disclose the sources of their funds to the Department of National Savings.
Finance Division officials said the government will not reduce interest rates of savings instruments despite the finance minister’s repeated assertions.
Next week, Finance Minister AMA Muhith will chair a meeting of the Coordination Committee on Rationalising Profit Rates to finalise a guideline on state savings instruments.
A committee tasked with finding out whether the government should reduce the profit rate of savings certificates has submitted a report to the senior secretary of the Finance Division.
The committee – led by Additional Secretary Nazmus Shakib – has recommended that some changes be brought to the savings policy.
Its report says that in addition to lower middle-income, middle-income families and pensioners, institutional buyers are also in possession of large volumes of savings certificates. Even some public and private banks have bought massive amounts of savings certificates.
In light of this, the division may issue a new guideline with separate rates of interest for general investors and institutional investors. In addition, income sources may be checked to prevent black money from being invested.
The new policy may not apply to those who have already invested in savings certificates, especially job seekers, people with disabilities, women and elderly people.
The government’s revenue targets in the budget for this fiscal will face a major shortfall in the absence of the new VAT law. Revenue deficits may go up to at least Tk20,000 crore. According to officials, the savings account will play a big role in meeting this deficit. Considering these aspects, the Finance Ministry is unwilling to reduce profit rates.
The government has another issue to consider. With the election knocking at the door, it is unwilling to upset middle income, lower middle income families and pensioners who are heavy investors of savings certificates by reducing the profit rates of these certificates at the moment.
Senior Secretary Hedayetullah Al Mamun said there is a need to change the profit rate on savings certificates. “But the finance minister’s decision will be final,” he said.
A source at the government’s policy-making level said decisions that might affect the government’s popularity are unlikely to be taken before the election.
The government is also planning to borrow massively from savings instruments.
On the other hand, a process has begun to identify large investors, especially corporate houses, big industrial entrepreneurs and business groups who have bought savings certificates in unusually large volumes.
The interest rate on deposits is 3-4% in private banks and 4-5% in state banks, while the interest rates on savings certificates ranges from 10% to 11.25%.
In the 2016-17 financial year, Tk52,327cr worth of certificates were sold against a target of Tk19,610cr, 167% higher than the previous fiscal year.