If rates are raised on savings certificates, no one will keep money in banks: Salehuddin

Finance Adviser Salehuddin Ahmed has said increasing the interest rates on savings certificates might adversely affect the banking sector.

"If we raise the rates on savings certificates, everyone will want to buy those instead of keeping money in banks," he told reporters today during a visit to Brahmanbaria's Nabinagar upazila.

"Liquidity is an important issue for banks. We have to strike a balance. If everyone buys savings certificates, where will the banks get money from?"

Salehuddin, the former governor, also addressed concerns about the ongoing instability in the banking sector.

When asked whether the banking sector can be stabilised before the upcoming national election in February, he said, "Many people have taken money abroad. Such incidents don't occur in any other country. Reforming the banking sector takes time. We cannot do that during this caretaker period; it has to be done by an elected government."

He also said Bangladesh Bank recently provided Tk 52,000 crore in support to 12 financially weak banks.

"Tk 22,000 crore had already been given. These are not permanent solutions. We are trying," he said.

Regarding rehabilitation efforts, he said Bangladesh Bank is actively working on it.

"Islami Bank is a major example where public trust has returned. For other banks, the government has enacted the Bank Resolution Act. The first condition under this law is that depositors' money is protected. No one's funds will be lost, it might take time, but the government is committed."

The adviser arrived at the Zilla Parishad Bungallow in Nabinagar around noon and later joined a view-exchange meeting with senior local officials at the upazila parishad auditorium.

He then visited his ancestral home in Dari-Sreerampur village.

The adviser is scheduled to return to Dhaka later in the day.

Brahmanbaria Deputy Commissioner Mohammad Didarul Alam and Nabinagar Upazila Nirbahi Officer Rajib Chowdhury, among other officials, were present during the visit.