Savings of Bangladesh
In Bangladesh, the saving rate is very low because of low employment. The national saving bureau has taken different steps to increase the overall savings of Bangladesh.
The gross domestic savings of Bangladesh is TK 7,077,060 million in 2019-20 which was TK 6,362,165 in 2018-19. The gross Gross National saving in 2019-20 is 8,419,651 which was TK 7,500,409 million in 2018-19.
Gross domestic and national savings (million BDT)
| 2016-17 | 2017-18 | 2018-19 | 2019-20(p) | |
|---|---|---|---|---|
| Consumption (1) | 14,753,559 | 17,365,869 | 19,062,661 | 20,886,722 |
| Investment (2) | 6,028,302 | 7,029,355 | 8,026,695 | 8,879,880 |
| Gross Domestic Product at m.p.(5) | 19,758,154 | 22,504,793 | 25,424,826 | 27,963,782 |
| Net factor income from abroad (7) | 849,010 | 1,026,283 | 1,136,096 | 1,340,480 |
| Gross National Income at m.p. (8)=(5)+(7) | 20,607,164 | 23,531,076 | 26,560,922 | 29,304,262 |
| Net current transfers from abroad (9) | 3,530 | 4,950 | 2,148 | 2,111 |
| Gross Disposible National Income (10)=(8)+(9) | 20,610,694 | 23,536,026 | 26,563,070 | 29,306,372 |
| Gross Domestic saving (11)=(5)-(1) | 5,004,595 | 5,138,924 | 6,362,165 | 7,077,060 |
| Gross National saving (12)=(10)-(1) | 5,857,135 | 6,170,157 | 7,500,409 | 8,419,651 |
Share of GDP of Domestic and National saving
| 2016-17 (million TK) | 2017-18 (million TK) | 2018-19 (million TK) | 2019-20 (million TK) | |
|---|---|---|---|---|
| Consumption | 74.67 | 77.17 | 74.98 | 74.69 |
| Investment | 30.51 | 31.23 | 31.57 | 31.75 |
| Gross Domestic saving | 25.33 | 22.83 | 25.02 | 25.31 |
| Gross National saving | 29.64 | 27.42 | 29.50 | 30.11 |
Sources of private savings in Bangladesh
- Private income: The Bangladeshi people save their segment of income after consumption. The person who has a higher income saves more and who have lower income saves less. When they save on banks or other financial institutions, those savings become an investment. Banks lend them to entrepreneurs.
- Credit creation by the bank: People deposit money to banks and banks multiple those money by loans to entrepreneurs. Banks reinvest their profits and it helps the businessman to collect capital from the bank. In this way businessman can boost their profits and business. Many employees get a job on those business farms and they save a portion of their income.
- Investment in share market: People buy a share of the company from the share market because it is their easy investment. To buy lots of shares they save lots of money. So, the share market is a source of private savings.
- Sales of different saving certificates: The government collects money from general people by selling saving certificates or treasury bills.
- Undistributed dividend: Corporate farms don’t share all of their profits to their shareholders. They reinvest some of their profits. So, it is also a source of saving which goes to investment.
Causes of low savings in Bangladesh
- Low per capita income: Per capita income ($2064 in 2020) of Bangladeshi people is too low. It is very hard to save after filling their daily needs. So, they can’t save more.
- Lack of education: The literacy rate of Bangladeshi people is not satisfying at all. Being illiterate they can’t feel the necessity of saving.
- Lack of security: Like other developing countries, the law and order of this country are not good enough. People fear losing all of their savings.
- Social and religious culture: Social and religious culture is not suitable to form capitals. Being uneducated, they believe in superstition and bigotry. So, they feel disinterested in savings.
Way to increase private savings of Bangladesh
- Encourage savings: The government should take proper steps to encourage people on saving. They can use print and electric media to encourage people to save more and more.
- Expand education: Educated people will create awareness and take responsibility for savings. Educated people are aware of their future life and income. So, they will save for their future.
- Collect saving from rural areas: The saving of rural people lies on their lockers. Bank and insurance companies can collect those and can invest savings.
- Capital market: Share market should set up in every metropolitan city. The share market helps people to save more.
- Insurance: Bangladeshi insurance companies are work in limited areas or sectors. They should expand their business and encourage people on saving.
- Increase fixed deposits: About 30 % of savings come from fixed deposits. there are not enough financial institutions to collect those deposits. The government should take proper steps on this.
- Expand national saving Bureau: Bangladesh’s national saving bureau should expand its business to rural areas and encourage people on saving.