Savings Certificate Profit Rates to Be Reduced Again from January

The Ministry of Finance has taken an initiative to reduce the profit rates on savings certificates once again starting from January. Once the proposal of the Finance Division under the Ministry of Finance receives approval from the Finance Adviser, the new rates will come into effect. Subsequently, the Internal Resources Division (IRD) will issue an official circular.

Sources concerned with the Finance Division said that currently the maximum profit rate on savings certificates is 11.98 percent and the minimum is 9.72 percent. The new proposal suggests reducing the profit rate by up to an average of 0.5 percent.

When asked about the matter, Finance Adviser Salehuddin Ahmed said that the proposal has not yet reached him. However, bankers have demanded a slight reduction in the profit rates on savings certificates in order to increase credit flow to the private sector. The government will take a decision considering the overall economic situation.

According to the proposal, comparatively higher profit will be fixed for small investments and lower profit for larger investments. There is a plan to offer higher profit for investments of BDT 750,000 or less and lower rates for investments above that amount.

Earlier, on June 30, as part of income and debt management, the government decided to determine the profit rates of savings certificates on a regular basis. At that time, the average profit rate was slightly reduced and it was announced that the rates would be reviewed again after six months. That six-month period will end on December 31.

IRD Secretary Md. Abdur Rahman Khan said that no final decision has yet been made on whether the profit rates will increase or decrease. A circular will be issued once recommendations from the Finance Division are received.

Among the various savings certificates under the National Savings Directorate, the Family Savings Certificate is the most popular. Currently, for investments below BDT 750,000, the profit rate after five years is 11.93 percent, and for investments above that amount, it is 11.80 percent. Before July 1, this rate was above 12 percent.

In addition, for the Pensioner Savings Certificate, the profit rate is 11.98 percent for investments below BDT 750,000 and 11.80 percent for investments above that amount. For the five-year Bangladesh Savings Certificate, the rates are 11.83 percent and 11.80 percent respectively. For the three-month interval profit-based savings certificate, the profit rate is 11.82 percent for investments below BDT 750,000 and 11.77 percent for higher investments. The same rates are also being offered for term deposit accounts of the Post Office Savings Bank.