Net sales of the national savings certificate rebounded in January as the banks went for a cut in deposit rates to implement the governmentimposed deposit rate of up to 6 per cent.
The net sales of the NSCs stood at Tk 2,240 crore in January with the sales of the certificates amounting to Tk 7,308 crore and encashment of the instrument fetching Tk 5,068.07 crore, according to the data released by the National Savings Directorate on Thursday.
In December, 2019, net sales was Tk 408 crore in negative after 80 months, meaning that surrender of the NSCs was higher than fresh purchase.
NSD officials said that the net sales of the savings tool in the first six months was much below expectation because of the tighter investment process introduced by the government.
Mandatory use of the tax identification number and an increase in source tax pushed down the sales of the tool even after paying over 11 per cent interest rate, which is almost double the return against bank deposits.
But, sales in January picked up as the banks started to bring down their deposit rate to 6 per cent in line with a government order to bring down the both deposit and lending rates.
The NSCs offer 10-12 per cent interest rate.
The net sales in July-December in this fiscal year was Tk 5,433 crore but in the first seven months of the fiscal year 2019-20, the figure stood at Tk 7,673 crore.
The July-January net sales, however, was 75 per cent less than the Tk 30,996 crore net sales in the same period of the fiscal year 2018-2019.
Even though the sales of the NSCs increased slightly in January, the government has a scope to borrow another 19,327 crore by issuing the NSCs as its budgetary target is to collect Tk 27,000 crore.
However, the government may reduce its NSC sales target to Tk 12,000 crore at the amended budget because of the slower sale.
Excessive sale of the instrument for the past several years has burdened the government’s repayment.
As there was a drop in the sales of the NSCs, considered one of the major internal borrowing tools to meet budget deficits, the government from July 1 to February 18 of FY20 borrowed Tk 52,310 crore from the banking system, exceeding its annual borrowing target. (Source: New Age)