The capital market is in a recession as there is no investment environment. Due to high interest rates, it is difficult to make a profit even in business and investment. And the law and order situation is also not favorable for investment.
Therefore, savings certificates are a safe investment tool for ordinary low-income people. There too, the profit rate is being reduced step by step, reducing the profits of customers. This leaves people with no place for safe investments. This is putting middle-class customers in trouble. Consumers are struggling due to the decrease in income in the high-value market and the abnormal prices of goods.
According to the information, the Internal Revenue Department (IRD) has announced to reduce the profit rate of savings certificates again after a gap of six months. The new profit decision has come into effect from January 1.
Meanwhile, although the interest rate on bank deposits has increased, the real income of customers is decreasing due to high inflation, in addition to 15 percent income tax on interest and account maintenance costs.
Although the nominal interest rate is about 9.5 percent, the real return is almost zero as the average inflation rate is 8.29 percent. As a result, the risk of loss of purchasing power is higher than the profit if you keep money in the bank.
People involved in the sector say that the government has tightened the reins on the sale of savings certificates in order to implement the terms of the International Monetary Fund (IMF) loan. The interest rate on savings certificates has been reduced. As a result, people have become more inclined to redeem savings certificates due to the upward inflation.
The attraction of savings certificates has started to decrease for the lower-middle class, middle class, pensioner group and vulnerable elderly citizens. The common people are being deprived by reducing the interest rate on savings certificates, which is one of the sectors for meeting living expenses.
According to the new rate announced by the government, the highest profit rate on savings certificates will be 10.59 percent and the lowest profit rate will be 8.74 percent. The profit rate was also reduced last July. Now, after six months, it has been reduced again. The profit rate of savings certificates is reviewed every six months.
It is seen that the profit rate is relatively high in the case of low investment. The profit rate is low in the case of high investment. In this case, the limit has been set at seven lakh 50 thousand taka. If this amount is less than or equal to it, the profit rate will be higher. In the case of investment of more than seven lakh 50 thousand taka, the profit rate will decrease.
According to the National Savings Department, the government has taken a net loan of two thousand three hundred and sixty nine crore taka from the sale of savings certificates in the first four months of the current fiscal year 2025-26. In the fiscal year 2024-25, the net loan was negative by about six thousand taka. After a long time, an improvement has been seen in this index. At the end of last October, the government's loan balance in savings certificates was 3 lakh 41 thousands crore taka.
Regarding these issues, Policy Exchange Bangladesh Chairman Dr. Masrur Riaz said, "High inflation and liquidity crisis have put severe pressure on the household economy, which has been reflected in the sale of savings certificates. As real income has decreased, small savers are prioritizing daily expenses instead of long-term savings. In addition, the decline in effective profits and strict regulations has also reduced the attractiveness of savings certificates. If inflation is not controlled and confidence does not return, retail savings certificates will remain weak as a reliable source of domestic debt for the government."
Meanwhile, interest rates on treasury bills and bonds are also on the decline. Demand for loans is now low due to investment stagnation. In this regard, the supply of dollars has increased due to increased remittances and foreign loan discounts. To prevent the dollar rate from falling too much, the central bank is buying dollars from the market. This has increased the supply of money in the market. In this situation, banks have increased their interest in lending surplus money to the government in treasury bills and bonds. Again, the tendency of individual investors to invest in treasury bills and bonds is higher than ever. Due to this, the interest rate on government securities is decreasing rapidly. The interest rate, which has been above 12 percent for a long time, has now decreased to below 10 percent. It is believed that this may reduce the interest rate at the bank's customer level.
According to Bangladesh Bank, the interest rate on three-month treasury bills has been decreased to 9.46 percent in October. In addition, the interest rate on six-month bills has reached 9.64 percent and the interest rate on one-year bills has reached 9.55 percent. But a year ago, i.e. in October 2024, the interest rate on all of them was about 12 percent.
There is no expected situation even after investing in the capital market. Far from making profits, thousands of investors have lost capital. According to CDBL, BO accounts have decreased by more than 42,000 in the year. Shareless BO accounts have increased. Although the BO maintenance fee has been reduced by one-third, the trend of investors leaving the market has not stopped. Not only investors were affected, but at least 117 offices of brokerage houses have been closed due to the inability to sustain business. In many places, investors have practically lost the convenience of transactions.
According to Bangladesh Bank, interest rates on bank deposits have been increasing continuously over time. At the end of October 2025, the average interest rate on deposits with a maturity of less than one year stood at 9.49 percent, and on deposits with a maturity of more than one year was 9.72 percent. In comparison, a year ago, i.e. in October 2024, the interest rate on deposits with a maturity of less than one year was 9.24 percent and the interest rate on long-term deposits was 8.98 percent.
These statistics clearly show that interest rates on bank deposits have increased significantly in the last two years. However, according to bankers, even though the nominal interest rate has increased, customers are not actually getting benefitted. The main reason for this is high inflation.
Overall, taking inflation and taxes into account, real purchasing power from bank deposits is decreasing in many cases instead of increasing. This is why bankers' assessment in the current situation is that the income from bank deposits is more inclined towards losses than profits.
(Translated by Lutful Hoque)
