Net sales of National Savings Certificates (NSCs) remained negative for the third consecutive year in FY 2024–25, driven by prolonged inflation, shifting investor preferences, and changes in government borrowing priorities.
According to Bangladesh Bank data, net NSC sales stood at negative Tk 6,063 crore in the July–June period of FY25 compares with that of a record negative Tk 21,124 crore in FY24 and negative Tk 3,295 crore in FY23.
The continued slump means that for the third consecutive year, the government failed to secure any net borrowing from this once-reliable source of domestic financing.
Negative sales occur when repayments on matured certificates exceed fresh investments, indicating that more savers are cashing in their certificates than buying new ones, bankers said.
This has forced the government to lean more heavily on the banking sector to meet its budgetary financing needs, they said.
The FY25 budget initially targeted Tk 15,400 crore in net borrowing from NSCs. However, persistent weak sales forced a downward revision to Tk 14,000 crore. Analysts point to several reasons for this underperformance.
High inflation over the past three years has been the most damaging factor, eroding disposable incomes and discouraging reinvestment by small savers, experts said.
While general inflation fell to 8.48 per cent in June — down from above 9 per cent for 35 consecutive months — it still remains high enough to keep pressure on household budgets.
At the same time, returns on alternative investment instruments have become more attractive.
Treasury bill yields climbed to around 12 per cent in June, drawing both institutional and individual investors away from NSCs.
Bank deposit rates have also risen, offering savers more flexible options without the procedural restrictions of NSCs, financial experts said.
However, treasury bill and bond rates have begun to decline recently as commercial banks’ investments surged and government borrowing needs eased, they said.
Government policy has also shifted away from heavy reliance on NSCs due to their high interest costs. Servicing NSC debt is significantly more expensive than borrowing through the banking sector or issuing treasury instruments.
This has prompted the government to prioritise repayments over fresh NSC issuance.
Data shows that net borrowing from the banking system fell to Tk 72,372 crore in FY25 from Tk 94,282 crore a year earlier, though borrowing from commercial banks alone surged to Tk 1,36,369 crore, contributing to liquidity strains in the sector.
Regulatory changes have further dampened NSC sales.
In September 2021, the government reduced NSC interest rates by 1–2 percentage points and introduced stricter compliance rules, including mandatory national ID and proof of tax return filings for purchases above Tk 5 lakh.
These measures discouraged some retail investors, particularly wealthier individuals who once used the instruments for large-scale investments under multiple names.
NSCs were a major tool for budget deficit financing, with net sales reaching Tk 19,915 crore in FY22, Tk 41,959 crore in FY21, Tk 14,428 crore in FY20, Tk 49,939 crore in FY19, and Tk 52,417 crore in FY17.
The current three-year negative streak marks a significant reversal from that trend.
