Savings bonds were once one of the most reliable sources of government funding. From retired teachers, widows, and small government employees, countless middle-class families used to keep their savings here in the hope of security and guaranteed profits. The government has also collected a large part of its budget deficit from this sector for a long time. In other words, savings bonds were an important bridge between the government and the common people.
But that confidence has now clearly waned. Net sales of savings certificates have been negative for four consecutive years since the 2022-23 fiscal year. In the 2022-23 fiscal year, it was negative Tk 3,295 crore, and increased to Tk 21,124 crore the following year. Although it decreased to Tk 6,633 crore in 2024-25, net sales in July-March of the current 2025-26 fiscal year were negative Tk 2,690 crore again. That is, there is a possibility that the entire fiscal year will be negative this year as well. This simply means that the government is having to return more money against matured savings certificates than new investments. This continuous decline in savings certificates is not just a story of the decline in popularity of a financial product, it is also a reflection of the declining saving capacity of people. In the last two years, due to the increase in the prices of daily necessities, 60 to 70 percent of the income of many families is being spent on food. Added to this is the uncertainty of employment. Many young people have not yet found permanent jobs, and many have lost the guarantee of regular income. As a result, very few people have the opportunity to invest in new savings certificates to meet their household expenses; rather, many are forced to cancel old savings certificates before their maturity due to necessity. This is also making it increasingly difficult for the government to collect money from this sector as before.
As the collection of funds from savings certificates has decreased, the government has naturally become more dependent on the banking sector. In the current fiscal year 2025-26, the banking sector's share in meeting the budget deficit from domestic sources is more than 85 percent. According to the forecast of the Ministry of Finance, this dependence may reach an average of 87 percent in the next three fiscal years. In my opinion, this trend poses a risk of narrowing the flow of credit to the private sector. In economic terms, this is called crowding out. The more bank loans the government takes, the less credit opportunities for entrepreneurs will be available. This will harm investment, employment and revenue growth. In the long run, bank liquidity will decrease, many entrepreneurs will turn to the informal credit market with high interest rates, and the growth of the overall economy will also slow down. This crisis will not be solved by introducing new financial products alone, if the root causes of the erosion of people's saving power, i.e. high inflation and income instability, are not addressed.
In this reality, Sukuk has come to the fore. It is a Sharia-based financial instrument, where profit is paid from the actual income of the project or asset instead of interest. Due to the lack of investment opportunities in interest-bearing bonds, a large fund of Sharia-based banks and financial institutions remained practically unused for a long time. To fill that void, Bangladesh Bank launched the first sovereign Sukuk in December 2020. A total of Tk 42,400 crore has been collected through 9 Sukuk till June 2026. Recently, a decision has also been taken to launch the first short-term Sukuk with a tenor of 9 months.
The market interest in Sukuk is also clear. Bids of Tk 72,598 crore were submitted against Tk 5,900 crore for the eighth Sukuk, and Tk 47,491 crore against Tk 5,600 crore for the ninth Sukuk. The main reason for this huge demand is that about 27 percent of the country's total banking assets are in the hands of Sharia-compliant banks, which have not had the opportunity to invest in government bills and bonds for so long. As Sukuk creates that opportunity, Sharia-compliant banks, Islamic windows, provident funds and insurance companies are actively investing in it. Malaysia, Indonesia and Pakistan have already taken this path, with Malaysia's sukuk market now the world's largest. Bangladesh is also moving in the same direction, and the government is now considering a step further by introducing Sharia-compliant savings bonds, the rate of return of which will be determined by a technical committee. If implemented, Islamic finance will reach the general public beyond the institutional boundaries, which was once the main strength of savings bonds. However, even amidst all these success stories, a few questions remain. Against the bids of 72,000 crore taka submitted for the eighth sukuk, only 5,900 crore taka was issued, meaning that more than 92 percent of the investors' money has been returned. Just as people stop applying in the capital market after repeatedly applying but do not get allocation, this unmet demand for sukuk can create the same frustration in the long run. And looking at the allocation calculations, it is clear who still dominates this market. Sharia banks and financial institutions received 85 percent of the total allocation, the Islamic window of conventional banks received 10 percent, and individual investors and provident funds together received only 5 percent. So where is the common man, the ever-familiar buyer of savings certificates? The answer is, he is staying outside this 5 percent. Sharia-based savings certificates can fill this void, for which we need widespread publicity, simple procedures, and proper training at the bank branch level.
The most difficult question remains at the end. The main reason for the decline of savings certificates is the erosion of people's saving power, and sukuk or Sharia-based savings certificates alone cannot provide a solution to that problem. Those who once regularly bought savings certificates, when inflation is still above 9 percent and employment is uncertain, will not return when new products come out. If this continues, what can happen is that the liabilities of old ordinary investors are met with the money of new institutional investors, which is not a structure that can survive in the long term.
Sukuk or Islamic financing is undoubtedly a timely initiative. However, if people's income ends up meeting their daily expenses, then just introducing new financial products will not yield the desired results. To restore people's saving capacity, equal importance must be given to controlling inflation, increasing employment, and increasing income. Only when this foundation is strong will initiatives like Sukuk yield full benefits. It is now clear that savings bonds are losing their previous position. But to fill that void, equal importance must be given not only to new products, but also to increasing the financial capacity of the common people. Otherwise, only the financing method will change, while the main crisis will remain the same.
