In FY2019-20, the government had to cut the target to Tk11,924 crore in the revised budget for savings tools
Between July and June of the last fiscal year 2019-20, the net sale of savings certificates stood at Tk14,428 crore which was 121 percent of its revised target.
Even though the government revised its target to borrow from savings instrument to Tk11,924 crore for the year.
According to the Department of National Savings, the net sale of savings certificates stood at Tk3,417 crore in June this year.
The government lowered its borrowing target from the savings instrument to meet the budget deficit in the last fiscal year as it received a low response from the sector. A low target has also been set for the FY2020-21.
In FY2019-20, the government had to cut the target to Tk11,924 crore in the revised budget for savings tools. The total target from non-banking sources was reduced to Tk14,924 crore.
The government previously targeted a borrowing of Tk30,000 crore from non-banking sources for the last fiscal year, of which Tk27,000 crore was expected to come from national savings schemes.
Finance Minister AHM Mustafa Kamal has set a loan target of Tk25,000 crore from non-banking sources, including Tk20,000 crore from savings instruments for the current fiscal year.
During FY 2018-19 government' net borrowing from the instrument stood at Tk 49,939 crore. So, last fiscal year government' net borrowing was reduced by 71.10 percent from the previous fiscal year.
Ahsan H Mansur, executive director of the private think tank Policy Research Institute of Bangladesh, told The Business Standard that the government did not get as much of a loan as it had initially targeted from this sector in the current fiscal year.
From the last fiscal year, the government has tightened the process of investing in savings schemes, he added.
From July 1 last year, the government automated four kinds of popular savings schemes and made the e-TIN mandatory for investing in them.
A tax burden for an investment of over Tk5 lakh was also put in place.
Additionally, the investment ceiling was set at Tk50 lakh and Tk1 crore for a person and a pensioner, respectively.
The profit rate for national savings schemes is still around 11 percent whereas the interest rate for bank deposits is a maximum of six percent.
At the end of June this year, the government's outstanding loans increased to Tk302,134 crore.