Interest rates on savings certificates to fall within two months

The interest rates on savings certificates will be reduced in two months to maintain a logical differential with the interest rate on bank deposits, says AMA Muhith.

The finance minister made the disclosure at a press conference on the government’s new budget at the Osmani Memorial Auditorium in Dhaka on Friday.

“Changes to the interest rate on savings certificates used to be irregular,” Muhith said.

“Some years the rate was not changed at all. But we have now made a rule to review the (savings certificate) interest rate once a year going forward.

"This is because there should not be too substantial a difference between the market interest rate and the rate on savings certificates.”

The high rate of interest on savings certificates is used as an incentive Muhith said.

“But this does not mean the difference should be too high,” he added.

“The interest rates on savings certificates will remain higher than other assets. If not next month, the rate will be reviewed the month after.”

Currently; interest rates on bank deposits are between 4-6 percent. The interest rate on savings certificates is approximately between 11 and 12 percent.

The review of the savings certificate interest rate comes about two years after it was reduced by 2 percent on May 10, 2015.

“Our interest rate on savings certificates is really quite high,” Muhith said.

“Usually the difference between the savings certificate rate and the rate on bank deposits is about 1-2 percent, but currently the difference is over 4 percent!”