National Savings Certificate: another fiscal drainage...

The National Savings Certificate holds roughly Tk 3.4 lakh crore of household money — a stock built up over five decades of deficit financing. The instrument traces to the National Savings Institute founded in British India in 1944; the first Bangladesh Sanchayapatra was issued on 1 October 1973, at a time when bank branches were scarce and inflation ran in double digits. It served a real purpose then. This video examines what it does now: who holds these certificates, what the government pays for the money, and what the arrangement costs the rest of the economy. The IMF has argued since Country Report No. 16/27 (2016) that NSC rates should be aligned with market rates. The World Bank has made the same point in successive Development Updates. Under the 2023 IMF programme, rate alignment became a formal condition. In January 2025 the government linked NSC rates to a weighted average of 2-year and 5-year Treasury Bond yields, with a premium of up to 50 basis points, reset twice a year. Covered in this video: What an NSC is, and why non-tradability is the structural feature behind every downstream problem The shift from financing tool to fiscal drain: net sales of Tk 52,417 crore in FY2017, against minus Tk 21,124 crore in FY2024 Bangladesh Bank's own survey of 512 buyers (SRW1901, 2019): 53% also held an FDR or DPS at a bank What the 88% fall in post-office NSC sales after TIN became mandatory suggests about who was buying Crowding out: private sector credit growth at 4.72%, a 24-year low, with lending rates at 15–16% Why monetary policy transmission weakens when savers have a fixed-rate alternative The ANU/CAMA finding of a 0.88 Pearson correlation between NSC rates and bank lending rates, 1983–2021 The absent sovereign yield curve, and a bond market at 6.6% of GDP against Indonesia's 31% and Malaysia's 125% Whether the January 2025 reform is sufficient SOURCES Alam, M.M. (2023), "Deficit Financing with the National Saving Certificate and Its Macroeconomic Consequences on Bangladesh's Economy", CAMA Working Paper 2023-45, Australian National University IMF Country Report No. 16/27 (2016), No. 23/409 (2023), No. 26/24 (2026); IMF Global Financial Stability Report (October 2025) World Bank, Bangladesh Development Update (October 2023, April 2024); Country Economic Memorandum "Change of Fabric" (2022) Bangladesh Bank, Special Research Work SRW1901 (2019), Survey on Investment in National Savings Certificates ADB, Stabilizing and Reforming the Banking Sector Program (2024) Department of National Savings; The Daily Star (August 2018, February 2020); Dhaka Tribune (May 2026); bdnews24 (April 2025) This channel covers the economy, banking and macroeconomic policy of Bangladesh. Disclaimer: This video is educational and analytical. It is not investment advice. #NationalSavingsCertificate #Sanchayapatra #BangladeshEconomy #Macroeconomics