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The Financial Express

Govt cuts investment ceiling in postal savings bank by two-thirds

SYFUL ISLAM | Published: May 29, 2020 09:22:07 | Updated: June 01, 2020 17:55:13


Govt cuts investment ceiling in postal savings bank by two-thirds

The government has cut the investment ceiling in postal savings instruments by two thirds taking into consideration their high interest rate, officials have said.

From now on, for both term and ordinary deposits, one will be allowed to invest up to Tk 1.0 million in a single name and Tk 2.0 million jointly.

Earlier, the ceiling was Tk 3.0 million and Tk 6.0 million respectively.

Internal resources division (IRD) issued a notification last week to this effect but uploaded it on its website on Thursday.

However, the investment ceiling for instrument of national savings scheme remained unchanged.

Under that scheme, an individual can invest up to Tk 5.0 million and a pensioner up to Tk 10 million.

A senior IRD official told the FE that the government would have to borrow a large volume of money from various sources to meet the heightened needs as Covid-19 has battered the economy.

The spending is increasing manifold as the government has announced Tk 1.0-trillion incentive package to help revive trade and economy.

Expenses in various sectors are also rising to fight the deadly coronavirus.

The official further said that the government could get money at a 6.0-per cent rate of interest from banks and financial institutions to meet the needs.

But if the government borrows from postal savings banks, it will have to pay 11.28 per cent for term deposits and 7.5 per cent for ordinary deposits.

The decision to slash the investment ceiling was taken to cut the government's spending in this sector, he stated.

Earlier, in mid-February the IRD had slashed the interest rate of the postal savings instruments to 6.0 per cent and 5.0 per cent respectively which sparked sharp criticism and outcry from various quarters.

At one stage the government in mid-March reinstated the interest rate after automation of the savings instruments selling system to prevent abuse of the tools.

It was which was mainly introduced to support marginal and low-income groups of people.

There are some 5.0 million deposit accounts with the savings bank of the postal department.

However, after tightening the rules for investing in national savings certificates last year, wealthy people rushed to invest in the postal savings bank which forced the government to go for automation of its operational procedures, the government said.

syful-islam@outlook.com

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