Bangladeshis Poured 57% More Into Savings Certificates as the Government Leaned Harder on Bank Borrowing

Savers Pile Into Sanchayapatra Again

Bangladeshis bought nearly 57 percent more in national savings certificates in July and August than they did in the same two months a year earlier, a sharp reversal after years in which the government had tried hard to steer small savers away from these instruments. Sales of sanchayapatra, as the certificates are widely known, reached Tk2,463.12 crore in the first two months of FY27, up from Tk1,572.29 crore in the same period of FY26, according to National Savings Directorate figures. August alone brought in Tk403.65 crore, against Tk278.81 crore in August of last year, a year on year jump of roughly 45 percent, or about Tk124.84 crore.

The draw is straightforward. Savings certificates have long offered better returns than most bank fixed deposits, and profit rates for new investments made between July 1 and December 31 of this year were revised in a way that stakeholders say sweetened the appeal further. With bank deposit rates having drifted down even as inflation has stayed stubbornly close to 8 percent for most of the year, the math increasingly favours the certificates for savers who can tie up money for a few years.

July alone, the first month of the fiscal year, had already set the tone: net sales of Tk2,059.47 crore that month were the highest for any single month in four years, nearly five times the entire net sales total for all of FY26 combined. Mustafa K Mujeri, a former chief economist at Bangladesh Bank, said the surge reflects a confidence deficit that still persists in the banking sector, with savers protecting what they have during a period of high inflation by moving toward an instrument that carries no risk to the principal, can be cashed out relatively easily, and still pays a competitive return. Whether that shift holds depends partly on how much capacity households actually have left to save after a year of elevated prices, a question Mujeri himself flagged as uncertain.

A Financing Mix That Is Quietly Shifting

The surge in certificate sales is only half of a bigger story about how Bangladesh is financing itself this fiscal year. Net government borrowing from the banking system rose by roughly Tk13,000 crore in July and August, separate Finance Division data show, a sharp turnaround from the same period a year earlier, when the government was actually making net repayments to the banking system rather than drawing new loans. Gross borrowing from commercial banks reached Tk16,601 crore in the two months, more than five times the Tk3,256 crore borrowed in the same period of FY26, while the government also repaid Tk3,728 crore to Bangladesh Bank, leaving net borrowing from the banking system at Tk12,872 crore, nearly 11.5 percent of the full year's Tk112,000 crore target reached in just two months.

Outstanding government debt to commercial banks stood at Tk608,025 crore as of August 30, up from Tk591,424 crore at the end of June, while debt owed to Bangladesh Bank itself actually fell slightly, to Tk90,322 crore from Tk94,051 crore, putting total debt to the banking sector at roughly Tk700,000 crore. Officials point to a familiar culprit: VAT collection fell nearly 20 percent year on year in the first two months of the fiscal year, a drop partly tied to a shift from monthly to quarterly VAT payments that authorities are now trying to walk back toward monthly collection. Layer on slower foreign loan disbursements and higher spending commitments, the new public sector pay scale, energy subsidies, development projects, and the revenue shortfall becomes one the government has had to plug somehow.

Financing metric (Jul-Aug)	FY26	FY27
Sanchayapatra sales	Tk1,572.29 crore	Tk2,463.12 crore
Gross bank borrowing	Tk3,256 crore	Tk16,601 crore
Net bank system borrowing	Net repayment	Tk12,872 crore
Outstanding debt to commercial banks	N/A	Tk608,025 crore (Aug 30)

Two Financing Channels, One Underlying Pressure

Taken together, the two data sets describe the same fiscal squeeze from different angles. On one side, ordinary savers are voluntarily lending the government money through certificates because the returns beat the alternatives. On the other, the government is leaning harder on commercial banks because a revenue shortfall has left it with less room to manoeuvre elsewhere. Both channels ultimately fund the same budget, but they carry very different implications. Certificate sales are a liability the government actively tries to manage, since high net sales eventually mean higher interest payouts down the line. In FY26 as a whole, gross sanchayapatra sales reached Tk92,513 crore against Tk92,077 crore in principal repaid on matured certificates, for a net contribution to financing of just Tk436.06 crore against a budget target that was first set at Tk12,500 crore and then revised down to Tk11,500 crore. For comparison, net government borrowing through certificates reached nearly Tk42,000 crore back in FY21, a reminder of how dramatically the government's reliance on this instrument has shrunk over the past several years even as outstanding customer investment in certificates, at Tk336,465 crore at the end of August, continues to inch upward from Tk333,846 crore a year earlier.

Bank borrowing carries its own tradeoffs. Bankers interviewed about the trend say the extra government borrowing has not yet meaningfully crowded out private sector credit, partly because private credit growth itself has slipped below 5 percent, leaving banks with ample liquidity to absorb government paper. Banks have, in fact, increased their holdings of treasury bills and bonds as private lending opportunities have thinned. But falling yields on those instruments are now squeezing bank earnings, with some yields reportedly dropping below deposit rates, a dynamic that could eventually discourage banks from continuing to soak up government debt at the current pace if it persists.

What This Means for Ordinary Savers and the Budget

For households deciding where to park savings, the current environment is relatively favourable to certificates for now: returns remain attractive relative to bank deposits, and the government has shown no sign of repeating the kind of abrupt profit rate cuts it attempted and then had to reverse in recent years after public backlash. That history is itself worth remembering. The government tried once before to cut sanchayapatra profit rates sharply, only to withdraw the decision and retain the previous, more generous rates after the move proved deeply unpopular with retirees and fixed income savers who rely on certificate income. The current revision, covering new investments through the end of this year, suggests policymakers are for now choosing to work with the market's appetite for certificates rather than against it, even though every additional taka raised this way adds to a stock of government liabilities that will eventually need to be serviced from future budgets.

For the budget itself, the combination of a VAT shortfall, heavier bank borrowing, and renewed appetite for certificates points to a government financing its spending through whichever channel is available this year rather than through any single, clearly dominant source. That is manageable in the short run given ample bank liquidity and a certificate market still happy to lend. The more important question, flagged by bankers already watching treasury yields slide, is how long banks keep absorbing government paper at today's pace if returns keep compressing, and whether the VAT collection mechanism can be fixed quickly enough to reduce the government's reliance on both channels before either one becomes a genuine constraint rather than a convenient release valve.

A Fiscal Year That Has Only Just Begun

It is worth stressing that all of this reflects just the first two months of a twelve month fiscal year, and both trends could still bend in either direction. If the VAT shift back to monthly collection takes hold and revenue recovers in the coming months, pressure on bank borrowing could ease considerably, and the government may not need the full Tk112,000 crore it has budgeted from the banking system. If it does not, two months of borrowing at Tk12,872 crore annualises to a pace that would overshoot the full year target, which would leave policymakers choosing between trimming planned spending, leaning even harder on banks whose appetite for government paper may not stay this generous indefinitely, or pushing certificate rates higher still to pull in more small saver financing. For now, the early read is simply that Bangladeshis are lending their own government money through two very different channels at the same time, one through the certificates they buy at the post office counter, the other through the banks that hold their deposits, and both are being tapped more heavily than they were a year ago.