Is lowering profit rate of Sanchayapatras for the elderly necessary at all?

Author Topic: Is lowering profit rate of Sanchayapatras for the elderly necessary at all?  (Read 1785 times)


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The decision, taken possibly without weighing its pros and cons from a long-term perspective, will put thousands of senior citizens in a sorry plight due to a future drastic cut in 'profit' of monthly savings certificates that are sold to them and are meant for them. The prime minister had quite rightly taken the step of relieving senior citizens of their pecuniary worries when they were permitted to buy Paribar Sanchayapatra (Family Savings Certificate) up to a maximum limit of Taka 4.5 million (45 lakh) at an individual level. An amount of, let us say, Tk 1,00,000 thus invested in such savings certificates provides a monthly yield Tk 1,070 profit per month under the previous rate, being fixed at 13.19 per cent.

On May 23, 2015, the rate of profit was lowered to 11.76 per cent, resulting in profit of only Tk 912 after slashing of Tk 48 as tax. This new rate of profit is applicable for those who purchased or will be purchasing such saving certificates on and after May 23 last, with effect from which date the rate was lowered. The holders of Paribar Sanchayapatras who bought the same upon May 23, 2015 will, however, enjoy the monthly return at the old rate as before until the end of their tenure.

Under the new downward revision of profit rate, a senior citizen who buys  such saving certificates and have no other source of income, will lose Tk 158 per Tk 100,000. S/he is legally entitled, as noted earlier, to invest up to a maximum amount of only Tk 4.5 million in his/her name.

The new step was made effective when a senior citizen, having attained 65 years of age and above, somehow could buy food with Tk 158 for his family of, at least, two members for a day. 

Who's a senior citizen? S/he is a person having retired as official and employee of public and private sector offices, freedom fighters and teachers and invested whatever was saved during his/her active life in Family Savings Certificates (FSCs). Not all such citizens have the ability to buy these certificates. At their ripe age when their health is failing, some of them have no other choice but to invest entire life's savings in this secure savings tool of the government. They cannot even physically invest their hard-earned money by setting up small industries or do some other businesses in these hard days. Neither will they venture to make investment of their hard-earned fund in the stock exchanges — the places that enjoy, as of now, no trust or confidence of the ordinary citizens. Such citizens have already twice burnt their fingers, too badly, in two scams — over the last one and a half decades.

Agriculture Minister Matia Chowdhury, while taking part in discussions in Parliament on the proposed national budget for fiscal year (FY), 2015-16 the other day, rightly highlighted the senior citizens' grievances over the cut in profits of the FSC. She implored finance minister AMA Muhith to restore the earlier profit rates, pointing out the fact that about 15 million Bangladeshis who are senior citizens do not have any other avenues of earnings and have been left out of the existing social safety net programmes of the government.   

It is a fact that population ageing in Bangladesh is gradually emerging as an issue, not separate from social integration, gender advancement, economic stability or poverty. The older section of the population is increasing much faster than that of the total population. In Bangladesh, only 6.9 per cent of the population was classified as elderly in 1950, and is projected to increase to 8.0 per cent in 2020 and 17 per cent by 2050.

The elderly population has to rely on family as the basic source of care. In the traditional joint family system, such people used to enjoy respectable and honourable life in the past. But the situation today is almost totally different. The process of ageing is taking place when this family pattern is breaking down due to urbanisation, migration, economic hardship, declining social values, self-interest, quarrels, maladjustment and so on. This changing situation and impact of other disadvantageous socio-economic conditions are causing problems and unhappiness for many elderly people, especially for those from the poor families.

It was Prime Minister Sheikh Hasina who had, for the first time, initiated the facility for the senior citizens by introducing the Paribar Sanchayapatra (PS) on August 1, 2010. This savings instrument was earlier meant only for female citizens, irrespective of age. It was because of this savings tool that thousands of women could be financially empowered to support their families, health and education of their children. 

Well-known for introducing cheaper cell phones and allowing import of duty-free computers, the prime minister took into stock the plight of women and later on of the senior citizens and innovated the savings tool through which they could ease to some extent their sufferings in leading their daily life. Such senior citizens, while mostly employed in the private sector, did never enjoy any financial perks in their service careers nor did they get all other facilities the government officials are entitled to. Coming from the middle class, they naturally feel shy in claiming, for reasons best known to all, any donation or other fiscal largesse. In some families, the senior citizens even do not have anybody to support them. Most of their children are now abroad.     

One of the reasons cited for a drastic cut in profit rates of PS has been that commercial banks cannot lend money to prospective investors at lower rates because of higher returns from the former. After the slashing of the Sanchayapatra profit rates, banks, too, slashed their lending rates. But who will take loan money for genuinely setting up new industries or expanding businesses when political uncertainty is a stark reality and cost of doing business has high owing to extortion, bribery and disruptions in electricity and gas supplies?

Moreover, it is difficult to explain, in terms of any hard economic rationale, how the profit rate on Family Savings Certificates that are sold to senior citizens, up to a maximum amount of Taka 4.5 million, can have a serious impact on banks' deposit and lending rates. Are all depositors with banks  senior citizens? And then again, how many of those senior and female citizens have the capacity to hold such savings certificates up to the maximum amount of permissible limit. Most of their holders are marginal ones. If there is any abuse here, particularly in the form of 'benami' holdings of such certificates, why does not the authorities concerned make it compulsory for those buying it to give their proper identity or electronic(c)-tax identification numbers (TINs) at the time of purchase? Those who do not have e-tins, can give their national identity card numbers.

Furthermore, such senior citizens including the female citozens, holding up to the maximum permissible limit of monthly or three-monthly Paribar Sanchayapatra or other Sanchayapatras are required to show their earnings in their annual tax returns for the purpose of making tax payments. If they do not do this, then they are evading or avoiding taxes. It is the responsibility of the NBR personal to deal with such cases. But why should the genuine tax-payers suffer? Why should the head be chopped off for headache?

Meanwhile, a mass circulation vernacular daily in its issue on June 21 made a front-page banner headline: "Rin Nao, Mere Dao' (Take Loan Not to Repay). It said during the last five years, a whopping amount of Tk 100 billion was swindled from state-run banks and the Basic Bank on 'fake investment' with no chance of getting the money back. Sadly, senior citizens could never be such crooks to have a share in it! The lending rate also does not matter much for real or genuine investors and borrowers. Such investors and borrowers serviced their loans to non-banking financial institutions quite well even when their lending rate was about 20 per cent. However, those in the habit of defaulting on loan servicing will continue to do this, even if lending rate is only nominal.

Even a former Cabinet Secretary known for honesty and integrity had pleaded for doing something for the senior citizens. In a recent article, he wrote: "Unfortunately a big segment of adult population (in Bangladesh) is deprived of the facilities essential for a happy living in the old age. They do not get the necessary support from family members and close relatives. Instead they are often exploited and persecuted by the persons surrounding them. It has been revealed through a survey that in Bangladesh 88 per cent elderly people are subject to psychological stress, 83 per cent suffer negligent/ indifferent behaviour, 54 per cent are economically exploited and 40 per cent are physically assaulted by their near and dear ones."

The present government is politically committed to stand by the side of the senior citizens for their welfare. The cabinet already approved the national policy for older persons. As per the new policy, the Bangla-deshis who are senior citizens, will be entitled to government facilities to be made available. But sadly, the ministry of social welfare, which was assigned the task of implementing the policy, is yet to make public what it has done so far.

According to the new policy, some programmes will also be taken to ensure responsible and safe, workable environment for the old. Some of the seats of all public transports will be kept reserved for older persons. Old homes will also be established. The government will also take initiatives to attract the private sector in this regard. But no progress is visible as yet. Allowing higher profits on Sanchayapatras for senior citizens will be a befitting step to facilitate them to live a modest living in view of their situation in to-day's socio-economic context of Bangladesh and also of their contribution during their active service to making the country what it is today.