Higher savings certificate rates will hurt banks, warns Finance Adviser

Interim government finance adviser Dr. Salehuddin Ahmed has cautioned that increasing returns on savings certificates could discourage people from depositing money in banks, potentially creating a liquidity crunch in the banking sector.

Speaking to reporters on Saturday after a meeting with government officials at the Nabinagar Upazila Parishad auditorium in Brahmanbaria, Dr. Salehuddin said, “If we raise the profit rates on savings certificates, everyone will rush to buy them instead of keeping money in banks. But banks also rely on liquidity. We have to balance these interests. If everyone buys savings certificates, where will banks get their funds from?”

His remarks follow a recent government decision that revised profit rates on savings instruments. On June 30, the Internal Resources Division of the finance ministry issued a notification setting the highest interest on savings certificates at 11.98 percent and the lowest at 9.72 percent for the next six months.

Under the new rules, investors with smaller holdings will earn relatively higher returns, while those with larger investments will receive lower rates. A threshold of Tk 750,000 has been set, meaning investments below this amount will fetch comparatively higher profits, while returns taper off beyond this level. Overall, the profit on savings certificates has been reduced by about Tk 57 per lakh.

Dr. Salehuddin also addressed concerns over the health of the banking sector, noting that Bangladesh Bank is working to rehabilitate troubled banks. “Islami Bank is an example where confidence is returning. For other banks, a bank resolution act has been enacted. The government is committed to ensuring depositors get their money back. No one’s money will be lost, though it may take some time because many have siphoned off funds—something unprecedented globally.”

On recent turmoil within the National Board of Revenue (NBR), he said, “Discussions are ongoing to resolve the issues at NBR. We will do whatever is necessary through dialogue. A strong five-member committee has also been formed.”

Regarding foreign investment, the finance adviser added, “We are trying to ensure that investors do not have to run to 10-12 offices for approvals. We are working to centralize all necessary clearances to attract more foreign investors.”