Dhaka, Bangladesh (BBN) – The government has relaxed the rules on investment of U.S. dollar and premium bonds allowing reinvestment of the bond amounts for unlimited terms instead of another term of three-year period.
Under the amended rules, on maturity, if a holder fails to encash the bonds, the principal amount of the bonds shall be treated as re-invested for any number of terms of three years, officials said.
The finance ministry has issued a notification in this connection and asked the authorities concerned to follow the amended rules for reinvestment of the principal amount of the bonds.
Meanwhile, the central bank of Bangladesh has decided to issue a circular soon in line with the finance ministry’s advice and will ask its branch offices and the commercial banks to follow the amended rules of the government approved savings instruments.
“The government has relaxed the rules to encourage the Non-Resident Bangladeshis (NRBs) to invest more in the risk-free savings instruments,” General Manager of the Debt Management Department of the Bangladesh Bank (BB), the country’s central bank, Mijanur Rahman Joddar said on Sunday.
Mr. Rahman also said such amendments will help the NRBs to reinvest their hard-earned foreign currency in the bonds without any hassle.
The U.S. dollar investment bond will mature for payment after three years from the date of issue.
The bondholder will be entitled to draw interest on half-yearly basis at a fixed rate of 6.5 percent per annum in U.S. dollar.
The US dollar premium bond also shall mature for payment after three years from the date of issue.
The bondholder will be entitled to draw interest on half-yearly basis at 7.5 percent fixed rate per annum in Bangladesh Taka (BDT) at the USD/BDT exchange rate, according to the existing rules.
Meanwhile, the sale of both the US dollar bonds has increased in recent months mainly due to low interest rate on deposits in the developed countries following the ongoing global meltdown.
The sale of US dollar investment bond grew by 43.70 per cent to Tk 1.79 billion in fiscal 2008-09 (FY09) against the previous fiscal. A total of Tk 1.25 billion was collected from the sale of the bond in fiscal 2007-08.
The sale of US dollar premium bond stood at Tk 344.20 million in FY09, registering a 21.59 per cent growth compared with the previous fiscal, according to the central bank statistics.
“The NRBs will be able to earn more through investing in the risk-free savings instruments due to high interest rates on the bonds,” a senior official of a foreign commercial bank said.
He also said the interest rates on deposit in terms of US dollar are hovering between zero and 0.50 per cent in the international market.
The Bangladesh government introduced the bonds November 1, 2002 to provide the highest profit or interest to the NRBs and also nationals having his or her origin in Bangladesh.
Maturity period of the bonds is three years. But the holders will be able to withdraw interests once every six months.
Denominations of the bonds are US$ 500, $1,000, $5,000, $10,000 and $50,000.
BBN/SS/SI/AD-17August09-4:39 am (BST)
