The National Savings Directorate (NSD) has recently sent a proposal to the Internal Resources Division (IRD) of the Ministry of Finance to lift the limit on investment in pensioners' savings scheme meant for government employees.  

Substantial increase in retirement benefits of the government servants following the introduction of the new pay-scale has been shown as the reason for relaxation of the rules concerned, sources said. 

A pensioner is now allowed to invest a maximum amount of Tk. 5.0 million in the scheme. He or she can also purchase three types of general NSD savings certificates — five-year Bangladesh Sanchayapatra, Three-monthly profit-based Sanchayapatra and Family Sanchayapatra — worth Tk.  10.05 million in his/her individual name. He/she can also invest another Tk3.0 million each in Five-year and Three-monthly savings instruments in joint name.

"The NSD proposal to withdraw the limit for investment in Pensioners' Sanchayapatra, if accepted by the government, would be a discriminatory move. In that case, the existing investment ceilings for general NSD savings tools for private individuals would also require a raise, for the sake of fairness", a retired bank official said. 

He took a swipe at the opponents of the savings scheme and said, "The NSD savings tools are in fact the safety nets for the thousands of retirees and old women. The government is mobilising funds through those at yield rates a bit higher than those offered by the banks on time deposits. But the government is also doing a part of its job towards old retirees and women". 

If there is any abuse of the facility, the government should look into it and initiate the corrective measures, he said, adding discontinuation of the schemes would multiply the miseries of poor savers.   

      Allegations have it that a portion of funds belonging to unscrupulous officials and private individuals has been flowing into the government's savings schemes, particularly the sanchayapatras, in the absence of any mechanism to counter it. 

It is suspected that a section of people are buying savings tools in the name of relatives and subordinates to bypass the maximum limit set for investment under individual as well as joint names. The fund thus invested could be both legal and illegal. 

What an investor needs to buy sanchayapatras are a photocopy of the national identity card (NID) and his/her own photos and that of his nominee/s. 

However, concerned circles said, suspicion is growing that some buyers of savings tools are using fake NIDs. 

One way of checking it, according to relevant officials, would be making the electronic Taxpayers Registration Number (e-TIN) mandatory for the buyers of savings instruments. However, some fine tuning might be necessary to accommodate people who, for genuine reasons, do not have e-TINs.   

Although the government is collecting tax at source from the buyers of savings tools at a rate of 5.0 per cent it is yet to make e-TIN submission mandatory.

The government remains in the dark about the personal details of the people investing in savings instruments. The authorities, it seems, are more interested in mobilising funds than having information about the buyers. 

There are maximum limits of investment in a savings tool, ranging from Tk 3.0 million to Tk 5.0 million, in single name.

An investor can invest around Tk 20 million in total in different saving schemes in his/her own name and the jointly with another individual.

Officials said submission of photocopy of the National Identity Card (NID) is mandatory for purchase of saving tools. But there is suspicion that some people do use fake NID to purchase the savings tools, he said. 

A senior tax official maintained that it is a good proposal to make e-TIN mandatory for investment in saving certificate as they are paying tax at source on the profit earned from the investment.

"Both people with taxable income and those without it are paying tax at source at a rate of 5.0 per cent against profit earned from the savings certificates," he said.

Number of e-TIN holders will go up manifold if the government makes submission of the e-TIN mandatory for investment in savings tools.

The tax official, however, said, there is no leakage in tax collection from saving instruments as both taxpayers and non-taxpayers are paying tax at source on their profit.

The NBR received Tk 4.30 billion as tax at source until April of the outgoing fiscal from the saving instruments across the country.

Only from Dhaka city and its adjacent areas, the tax authority collected Tk 1.47 billion tax at source from the savings tools, NBR data showed.

The tax official, however, agreed that some people are paying less tax due to lower rate of tax at source.

Director General of the National Savings Directorate (DNS) Bablu Kumar Saha, however, said mandatory e-TIN will be a hassle for the small savers as they will be required to submit tax returns despite not having taxable income.

He also dismissed the allegation about investment in savings instruments using fake identities. 

He said the directorate has already initiated the process of digitising its operation.

"It has already started the pilot operation of a relevant software in Dhaka. It is set to run in full swing across the country from financial year 2016-17," he said.

With the system in place, the government will be able to provide electronic fund transfer network (EFTN) for the investors of the saving instruments.  

Syedul Huq, a retired banker who has made investment in family saving tools, finds the process of depositing and withdrawal of monthly return out of the same troublesome.

"Buyers of the saving certificates should get the profits deposited with their bank accounts under EFTN," he said.   

Currently, investors have to carry the slip books of the saving certificates with them at the time every single withdrawal of their monthly/ tri-monthly profits.

Dr Ahsan H Mansur, executive director of the Policy Research Institute (PRI), also found the profit withdrawal troublesome and said the system should be made paperless. 

In the meanwhile, some investors are somewhat confused following the issuance of a rule by the High court on April 3 last on the rights of the nominees in relation to deposits with banks. 

The HC rule said after the death of a person, the money deposited in his/her accounts would go to their heirs instead of nominees. It also said the nominee is a trustee and agent only. The deposited money of the deceased persons will have to be divided among the successors as per the Mohammedan Law, the court added.

Following the order, buyers of the savings instruments have a feeling that the HC rule will also be applicable on them.

Talking to the FE, a senior official of the saving directorate said they are yet to receive any copy from the HC in this connection.

Until receiving the instruction, the nominees will enjoy the ownership of the amount invested in saving instruments after death of their buyers, he said.

On the other hand, central bank officials also said they are yet to receive the copy of High Court (HC) rule on disbursement of the proceeds of bank deposits of the deceased accountholders.

"We'll act after receiving the copy of HC rule," a senior official of the Bangladesh Bank (BB) told the FE Wednesday without elaborating.

Most of commercial banks are also now following a wait-and-see policy in dealing with such issue to avoid financial risk.

Ali Reza Iftekhar, Managing Director and Chief Executive Officer (CEO) of the Eastern Bank Limited, said banks are now providing the money of the deceased accountholders to the nominees as per existing rules.

"It is the duty of the nominees, not the banks, to distribute the money among the successors," Mr Iftekhar, also former chairman to the Association of Bankers, Bangladesh (ABB) told the FE.

He also said the banks are yet to receive any copy of the rule from the high court. 

"We've already settled few cases involving some small amount of money on the basis of certifications by the relevant authorities," a senior official of a leading private commercial bank (PCB) told the FE.

His bank is yet to settle any case involving a large amount of money. 

"We're waiting for the HC verdict copy or the BB's instruction in this connection," the private banker explained.

He also said the depositors are now allowed to include the names of nominees more than one instead of one individual as practiced earlier at the time of opening accounts.

The government not only wants to borrow from this sector but also provides financial security to different sections of savers through such schemes.

Currently, banks are offering only about 4.0 to 5.0 per cent interest on fixed deposit schemes. But the rate of yield is maximum 11.76 per cent in the case of savings certificates.

From saving tools, the government has set borrowing target at Tk 196.10 billion for upcoming FY. Until April, the government sold savings certificate worth Tk 431.08 billion of the outgoing fiscal. 

Its net sale after interest payment is Tk 264.87 billion in July-April period of the current Fiscal Year (FY).

There are different saving schemes under the NSD including five-years Bangladesh Saving certificate, three-monthly profit based savings certificate, pensioners saving certificate, family saving certificate.

Investment limit for five-year Bangladesh and three-monthly profit based certificate is each Tk 3.0 million in single name and Tk 6.0 million in joint-name. 

Investors can invest up to Tk 5.0 million in pensioners' savings certificate. Investment limit for family certificate is Tk 4.5 million in single name. 

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Source: The Financial Express