This refers to a recently-published article styled as "Sanchayapatra- A Trojan horse" (not in the FE) by B P Paul, Chief Economist of the Bangladesh Bank. It has been argued that good sale of savings certificates is an anathema to the growth of capital market. So there is the temptation to clip the wings of the savings certificate scheme to cut down its speed. But there are more important issues in the national economy than just the growth of capital market and again when the latter suffers from frequent lack of transparency.
The BB chief economist mostly confined himself to the theoretical explanation of savings and investment dynamics as enunciated by such economists who largely fail to understand the bread and butter dynamics of the so-called Third World where people were ruthlessly exploited by the colonialists and their stooges for centuries.
The ground realities of countries like Bangladesh are: financial discipline is miserably absent, stock market is more often than not frequented by ruthless scamsters, billions of dollars are getting out of the country through unexplained import bills, rich people are continuously robbing the country in order to build safe homes in Western countries and enriching the coffers of Swiss and other international banks. It is not understood as to why B P Paul is so interested to axe the interest rates of different Sanchaypatras or government-sponsored saving instruments, the primary aim of which is to give some relief to women and elderly persons and of course to the pension-holders.
It seems very unkind to be prejudiced in favour of private banks and against millions of our poor countrymen who just eke out a living out of these interest rates. From the long queue found every day before the savings directorate, it is obvious that the people over there in old sarees or way back shirts and trousers could be anything but rich, as claimed by him. Besides, every national saving schemes carry a maximum ceiling of individual investment, not exceeding around Tk. 0.3 to 0.5 million only.
It is also argued that there is no such savings certificate scheme outside Bangladesh. This is not true. There are a number of good savings schemes in India and Pakistan. In India, National Savings Certificates and Sukanya Samridhi Accounts (for women) are very popular projects. In Pakistan, Defense Savings Certificates and Bahbood Savings Certificates for widows and senior citizens are widely acclaimed. Even in Europe, there are countries which are ardent followers of free market economy, but they also maintain many social welfare programmes for their citizens.
The sale of savings certificates should not affect the deposits of commercial banks. First of all, there is a ceiling for purchase of savings certificates. Secondly, the certificates can be purchased through a small number of windows maintained by the National Savings Directorate. But the banks have a wide scope for collecting deposits through a large number of branches in both urban and rural areas. Savings certificate-holders cannot encash the certificates as and when they require, because if they want to encash these before the date of maturity they will have to incur loss. So there is no chance of thwarting the smooth flow of liquidity.
Bangladesh has earned name and fame globally for its economic development and empowerment of the women compared to its neighbours. Among all the savings schemes in the country, the most important and popular one is the Family Savings Certificate. This is exclusively meant for women and elderly people above the age of 65. Savings certificate schemes should also be considered part of the country's overall social safety net programmes. In this context, it may also be pointed out that the saving certificate-holders are tax-payers.
The chief economist of the Bangladesh Bank may not forget the basics of welfare economy where the accrued interests given to individuals are mostly spent not only for their respective livelihood but also for life-saving medications. Needless to say, these create their necessary purchasing power which in its turn boosts production and enrich the overall macro economy.
Nobel Prize-winning economist Professor Joseph Stiglitz, who was the chairman of U.S President Bill Clinton's Council of Economic Advisors once said:
"First, the business people generally oppose subsidies for everyone but themselves. For their own sector, there were always a host of arguments as to why some government help was needed. From unfair competition abroad to an unexpected downturn at home, the stories were endless.
"Second, everyone was in favour of competition in every sector but their own. Again, there were a host of arguments for why competition in their sector would be destructive, or why it needed to be managed carefully.
"Third, everyone was in favour of openness and transparency in every sector but their own. In their sector, transparency might lead to unnecessary disturbances, erode its competitive edge, and so forth."
Therefore, our economic policy should be formulated for the welfare of the people at large rather than for the welfare of the business interests of a few banks.