The government has taken an initiative to widen the scope of investing in bonds, including wage earners' bonds, as part of its efforts to boost bond market in the country as well as increasing remittance inflow through the formal channels, officials said.
Finance Minister AMA Muhith recently issued an official instruction, asking the senior officials of his ministry to find ways through consultation with the authorities concerned for increasing the opportunities to invest in the bonds, they said.
Officials said the instruments like Wage-Earner Development Bond (WEDB), US Dollar Premium Bond (UDPB) and US Dollar Investment Bond (UDIB) were introduced years back, aimed at stimulating the remittance inflow into the country.
But those could not attract as much investment as expected, they added.
At present, a person has to be present in Dhaka if he/she wants to buy any of the bonds from the authorised dealer banks.
"… this is a backdated process and it should go," the minister mentioned in the directive, stressing the need for boosting further the country's bond market.
The government has long been trying to boost the bond market while capital market stakeholders and analysts have been repeatedly requesting the government to help bring derivates like bonds in the secondary market and create alternative investment opportunities for mitigating the investment risks.
"The purchasing system of the bonds is old-fashioned. It should be updated immediately," an official of finance ministry told the FE Monday.
Officials said steps have already been taken to simplify the process of investment in the bonds by the non-resident Bangladeshis (NRBs).
They pointed out that a lack of mutual trust between customers and the bond-selling banks was also partly responsible for discouraging investment in the tools.
The government had introduced the WEDB in 1981, followed by the UDPB and UDIB in 2002. Now the yield rate of WEDB is 12 per cent, UDIB is 6.50 per cent and UDPB is 7.50 per cent.
The response so far, however, failed to achieve the goal of introducing the instruments due to poor sales since the beginning, said an official of the finance ministry.
According to statistics of Department of National Savings (DNS), net investments in WEDB were Tk 1.45 billion in the fiscal year (FY) 2010-11, Tk 1.45 billion in FY 2011-12, Tk 760 million in FY 2012-13, Tk 1.29 billion in FY 2013-14 and Tk 4.28 billion in FY 2014-15.
The net sales of UDPB were Tk 170 million in FY 2010-11, Tk 710 million in FY 2011-12, Tk 310 million in FY 2012-13, Tk 260.93 million in FY 2013-14 and Tk 80.0 million in FY 2014-15.
UDIB fetched Tk 1.18 billion in FY 2010-11, Tk 2.98 billion in FY 2011-12, Tk 2.64 billion in FY 2012-13, Tk 440.68 million in FY 2013-14 and Tk 1.25 billion in FY 2014-15.
"The government is trying to change the current situation. A process is now underway to this effect, a deputy general manger of Bangladesh Bank told the FE Sunday.
"Presently, we are encouraging the banks to sell the instruments online for the Foreign Currency Account (FCA) holders."
He, however, said the prospective clients hesitate to buy the bonds online in accordance with the existing policy as they express doubt and question whether the bonds are real or not.
He said the prospective clients also raised questions if the bond documents would be fake ones. Many of the non-resident Bangladeshis (NRBs) or Bangladesh origin foreign nationals have inquired about the bond documents with the Bangladesh Bank over phone, he added.
On the other side, the BB official said, the dealer banks were mostly reluctant to sell the bonds online or through existing system due to procedural complexities, especially nominee complexities.
"We are now examining the savings bonds, especially WEDB," senior secretary of finance division Hedayetullah Al Mamoon, told the FE Sunday.
The WEDB issued in Bangladesh Taka (BDT) currency against wage earners' foreign exchange remittance.
A wage earner in his/her own name, in the name of a person nominated by the wage earner or in the name of a beneficiary of the wage earner residing in Bangladesh, any employee of the government or of a statutory, autonomous, semi-autonomous body working abroad on lien, government employees working in the Bangladesh High Commissions abroad can invest in the WEDB.
Bangladeshi nationals residing abroad and Bangladesh origin foreign nationals residing abroad can invest in UDPB and UDIB. The bonds issued in equivalent U.S. Dollar against the foreign exchange remitted by the wage earners.
Meanwhile, a central bank official said, the government was trying to increase the remittance inflow through formal channel by adopting measures now under its consideration.
The considerations were being made due to sluggish inflow of remittance apparently due to less economic activities in the middle-eastern countries and sending remittance by NRBs through informal channels, he added.  
rezamumu@gmail.com [Read More]

—–
Source: The Financial Express