The government has slashed the interest rates on all major National Savings Certificates (NSCs) by 47 to 57 basis points after six months, as part of a move towards a market-driven interest rate system.

The revised rates will apply only to NSCs issued on or after July 1, said the finance ministry notice yesterday.

For certificates issued before July 1, the original rates will remain valid throughout the investment tenure, as per the notification. For reinvestments, the applicable interest rate will be the rate in effect on the date of reinvestment.

The latest rate reductions are steeper than the pre-January rates.

The government introduced a market-based interest rate mechanism in January under which NSC rates are reviewed and potentially adjusted every six months based on treasury bond yields.

When setting the NSC rates, a premium of up to 50 basis points is added to the weighted average yields of five-year and two-year treasury bonds.

The five-year Bangladesh Savings Certificate will now yield 11.83 percent for investments of up to Tk 7.5 lakh, down from 12.40 percent. For investments above Tk 7.5 lakh, the rate will be 11.80 percent, down from 12.37 percent.

The three-month profit-bearing savings certificate will now yield 11.82 percent for investments of up to Tk 7.5 lakh, down from 12.30 percent, and 11.77 percent for higher investments, down from 12.25 percent.

Pensioner Savings Certificates will yield 11.98 percent for investments of up to Tk 7.5 lakh compared with 12.55 percent earlier. For amounts above Tk 7.5 lakh, the rate is 11.80 percent, down from 12.37 percent.

Family Savings Certificates will now offer 11.93 percent for investments of up to Tk 7.5 lakh, down from 12.50 percent, while investments above that amount will earn 11.80 percent, down from 12.37 percent.

Similarly, Post Office Savings Certificates will yield 11.82 percent for investments of up to Tk 7.5 lakh, down from 12.30 percent, and 11.77 percent for larger investments, down from 12.25 percent.

However, the interest rates for the Wage Earner Development Bond, US Dollar Premium Bond, US Dollar Investment Bond and the Post Office Savings Bank General Account remain unchanged.