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Also speaking on the matter, Selim Raihan, professor of economics at the University of Dhaka, stated that borrowing from treasury bonds increased as they offered attractive interest rates, which many investors see as secure and stable.

“That has encouraged even institutional buyers who were not very active before to enter this market,” he noted.

He identified regulatory changes as another factor. “Previously, treasury bonds were mainly accessible through banks, but now individuals can buy them directly. That has widened participation beyond savings certificates.”

“While individuals can only purchase up to a certain limit in savings certificates, treasury bonds have no such ceiling.

Anyone can buy as much as they want. This is a key reason behind the shift, especially at the individual level,” he added.

Prof Raihan, also the executive director of the South Asian Network on Economic Modeling, noted that weaker sales of savings certificates may also reflect households’ reduced savings capacity.

“High inflation squeezed the middle class, the main buyers of savings certificates, as well as lower middle-income groups who used to buy savings certificates occasionally. Their ability to save has diminished,” he said.

Another factor, he added, is lower government expenditure.

“Since the current government took office in August, its fiscal approach has been cautious, with significant cutbacks in expenditure. As a result, borrowing needs have also remained contained.”

However, he warned that the trend carries risks for the economy.