Net sales of National Savings Certificates continued to decline in the first 11 months of the current fiscal year, driven by prolonged inflation, shifting investor preferences, and a change in government borrowing priorities.
According to Bangladesh Bank data, net NSC sales stood at negative Tk 5,893 crore during the July鈥揗ay period of FY25.
Although still negative, the figure marks an improvement from negative Tk 17,742 crore in the same period of FY24.
Negative sales indicate that repayments on matured certificates outpaced new investments, leading to a net outflow of funds from the government鈥檚 exchequer.
Bankers and analysts attribute the drop largely to high inflation, which has eroded household disposable income, discouraging many small savers from reinvesting.
According to the Bangladesh Bureau of Statistics, general inflation fell to 8.48 per cent in June, after remaining above 9 per cent for 35 consecutive months.
However, the rate remains high for ordinary citizens, straining household budgets and forcing many to withdraw past savings instead of purchasing new certificates.
Besides, rising interest rates on bank deposits and government treasury instruments have made NSCs less attractive.
Treasury bill rates have surged to around 12 per cent, prompting investors to shift toward these higher-yielding, more flexible alternatives.
Bankers note that many institutional and individual investors now prefer treasury bills and bonds over NSCs due to better returns and fewer restrictions.
During the July鈥揗ay period, the government repaid more through NSCs than it raised, reflecting a continued shift away from this costly borrowing tool.
Facing mounting debt servicing costs on NSCs, the government has prioritized repayments over new borrowing through savings instruments.
Meanwhile, the government鈥檚 overall net borrowing from the banking system also declined.
Bangladesh Bank data shows that net borrowing stood at Tk 72,372 crore in FY25, down from Tk 94,282 crore in the same period of FY24.
However, borrowing from commercial banks alone surged to Tk 1,36,369 crore, contributing to growing liquidity stress in the sector.
Despite the prevailing downtrend, net NSC sales showed a brief rebound in March and April, registering Tk 80.55 crore and Tk 1,260 crore respectively. This uptick reflected the government鈥檚 renewed focus on NSCs amid tight liquidity in the banking sector.
NSC performance has remained weak over the past three fiscal years. Net sales were negative Tk 21,124 crore in FY24 and negative Tk 3,295 crore in FY23, indicating a continued slump.
Experts also point to regulatory changes, making certificates procuring a bit tougher, as a reason behind declining NSC investments.
In September 2021, the government cut NSC interest rates by 1鈥�2 per cent and introduced stricter compliance requirements, such as submission of national ID and proof of tax return filings for investments exceeding Tk 5 lakh.
These measures, according to bankers, discouraged many retail investors who valued discretion in their financial activities.
