The government has cut the interest rate for postal savings last week as per a notification issued by the ministry of finance. The notification the new move lowers interest rates on all four categories of postal saving certificates on one year saving to 5 percent from 10.20 percent.
For two-year schemes, the rate was cut to 5.50 per cent from 10.70 per cent. For three-year schemes it was slashed to 6 per cent from 11.28 per cent.
Many took the government slashing of interest rates on postal saving as a prelude to slashing interest on national savings instruments spreading panic as what happens if the source of their old age or pension time income come under major cut.
The finance ministry however immediately issued a clarification saying the rate cuts were only for savings accounts maintained with the postal department. The government has cut the interest rate for postal savings accounts and kept the existing rates unchanged for national savings certificates, clarified the finance ministry.
Depositors can withdraw profits from their postal savings after six months. In such case, the interest rate would be now 4 per cent for one-year schemes, 4.50 per cent for two-year schemes and 5 per cent for three-year schemes, according to the circular.
Previously, the rates were 9 per cent, 9.50 per cent and 10 per cent respectively.
However, those who opened postal savings account before February 13 would get their profits based on previous interest rates, a finance ministry official said.
The government has tightened the rules for savings instruments from this current fiscal year with a view to apparently getting savers to move back to banks for the purpose of parking their funds.
For example, depositors must have tax identification number (TIN) and bank accounts for opening postal savings accounts. Besides, the government has slapped additional 5 per cent tax on their profits.
These measures have led to a outsize decline in the sale of government savings instruments. People bought savings instruments worth Tk 5,433 crore between the months of July and December last year. The amount was Tk 24,993 crore a year earlier.
However, the 12 per cent interest rate on savings certificates of three- and five-year durations have remained unchanged.