Sale of savings certificate went down within the first month of the 2019-20 fiscal year owing to the several steps taken by the government.
According to the National Savings Directorate in July of this year Tk 1.6 billion worth of savings-certificates were sold which was well over Tk 50 billion in July of 2018.
Former Bangladesh Bank governor Dr Saleh Uddin Ahmed blames increasing taxes deducted on source and several other strict conditions imposed behind the drop in sales.
“People are having to face a lot of problems while investing in savings certificates. On one hand tax deducted at has been hiked. People are now leaning towards banks as they are providing better interests,” he said.
He added that this has led to the drop in sales on one hand and on the other deposits are increasing at the banks.
A large number of people were encouraged to deposit in savings certificate owing to the disparity between the interest in bank deposit and savings certificates.
As a result, the government at the behest of bank owners undertook several initiatives to discourage investments into the certificates.
One such move was hiking up the tax deducted at source from 5 percent to 10 percent on certificates worth over Tk 500,000.
Moreover, a bank account and Tax Identification Number (TIN) were made compulsory for the purchase of a savings certificate in a bid to prevent the same person from purchasing certificates from more than one place.
The steps have helped deposits to increase in the banks. According to Bangladesh Bank sources, in the last three months between April to June deposits increased to over Tk 607 billion.
Every year the government takes loans of two types to make up for the budget deficit. One is foreign loans and the other is internal source that is from banks and savings certificate sector.
The government has a target of borrowing Tk 770 billion amongst which Tk 270 billion is targeted to come from savings certificate.
During the 2018-19 fiscal the government planned to borrow over Tk 260 billion from the DNS but ended up loaning double the amount with nearly Tk 500 billion.
Prior to cutting down interests by two percent against savings certificates in 2015, the investors used to get profit of 13 percent.
Currently the DNS has four kinds of savings certificates:

Banks are reportedly offering more lucrative interests to attract deposits and have already set targets for their employees. Some banks are providing more than 14 percent interest rates and also offers of doubling the deposit within a year.