Frustration grows over rate cut of postal saving scheme
Retirees, senior citizens, housewives to hit hard
Special Correspondent :
Retirees and senior citizens have expressed utter frustration over the government recent move to slash interest rate on post office saving schemes.
Terming it a 'horrendous' decision, they said such a decision would leave a harsh impact on their livelihood.
"The rate cut will severely impact my livelihood as I have to rely largely on interest income," said one Monir Hossain, who has a three-year fixed deposit account with post offices. He said he opened the account after his return from Saudi Arabia three years back. "High interest rate encouraged me to perk my money with the post office deposit," he added.
Until February 12, the finance ministry offered as high as 11.28 per cent interest on a three-year fixed deposit account with post offices, which is higher than the interest rates given by banks.
In case of ordinary accounts in post offices, the interest rate was 7.5 per cent, which is also higher than the rates offered by banks for savings accounts.
"Now I have no alternative choice but to put my money to alternative source for interest income because of the government's latest move to cut interest rates on savings in post offices," said Monir Hossain with a note of frustration.
Like him, many other depositors also expressed annoyance over the government move urging it review the decision considering interest of the thousands of retirees and senior citizens.
Leading economists of the country also criticized the government for its rate cut decision terming it a 'wrong' approach.
"Retirees, senior citizens and housewives are relying on their savings as a form of income will hit hard following the rate cut," Dr Zahid Hussain, former lead economist at World Bank Dhaka office told The New Nation.
"In a current scenario where FD interest rates are declining, what are the options available for those senior citizens and retirees who depend on it to meet their financial needs? he questioned.
Encouraged by high return, people deposited Tk 13,950 crore in fixed deposit accounts in post offices in fiscal 2018-19, which was more than two and half times the deposits received in fiscal 2014-15, officials said.
"The reduction in rate would be catastrophic for the savers and pensioners. In fact, after adjusting for inflation, the real rate of return for investors will go negative," observed Dr Mirza Azizul Islam.
He said the banks are also going to rate cut on fixed deposits in line with the government's decision to bring down the lending rates to single digit from April.
"All these are not good news for senior citizens and pensioners who used to put money there for interest income," added Dr Mirza Azizul Islam.