Savings instruments for non-resident Bangladeshis (NRBs) seem to have evolved from an after thought by the authorities who began to realise their potential to help build the country's foreign exchange reserves only in the early 1980s.

That's why, till today, there are only two viable savings schemes - Wage Earners' Development Bond (WEDB) and US Dollar Bond - for the more than five million NRBs worldwide.

They are, of course, in addition to the usual time-tested options - land, property, stocks, bonds and initial public offerings (IPOs).

Traditionally, an NRB invests his first few years' savings in land and property, especially those who do not solely own any of them. And the lucky ones invest in migration (to a developed country).

Investment in short-term savings instruments usually appears third or may be fourth on the priority list, and then only of those who understand them.

Conservative attitude

When it comes to investment and personal finance, Bangladeshis are quite conservative - simply because of their sheer lack of understanding of how money multiplies and partly due to caution. No one wants to put his hard-earned savings into something they do not fully understand.

However, things are fast changing. The second-generation NRBs are taking chances with their money.

Bangladeshi finance officials have always seen the country's expatriate population as a mere source of foreign exchange remittances. That's despite the fact that foreign job seekers have always eased the unemployment pressure on the authorities in Dhaka. The foreign job market, specially the Gulf, has been a dumping ground for unskilled labourers.

The world has undergone a sea change in the 37 years since the independence of Bangladesh - which paved the way for its nationals to seek employment and opportunities abroad, but the government's mentality did not change a bit.

Though a lot of skilled Bangladeshis migrated to Europe, Australia and North America, the Gulf countries continued to receive unskilled and semi-skilled people for more than three decades. The Gulf NRBs even today remain only a source of remittances - or petro-dollars - as they are popularly referred to.

Negative perception

Although the perceptions of other communities about Bangladeshis here are quite negative due to the influx of a large number of unskilled labourers, and therefore they are neither creditworthy nor bankable, a good number of NRBs among the 700,000-strong Bangla-deshi community in the UAE do save quite a bit and their numbers are growing.

"Last year, NRBs subscribed to 320 million taka [Dh17.06 million] worth of WEDBs and another 100 million taka [Dh5.33 million] Dollar Bonds from our Dubai Branch only," said Abdul Awal, manager of Janata Bank's Dubai branch. "The number of subscribers is growing. This year, we expect the combined investment by Bangladeshis would cross 500 million taka."

Janata Bank has four branches - Abu Dhabi, Al Ain, Dubai and Sharjah, serving more than 22,000 account holders.

Wage Earner's Development Bond (WEDB), launched by Bangladesh Government in 1981, as a savings instrument, offers a minimum of 12 per cent interest and in five years, Dh100,000 could fetch up to Dh79,000.

The Dollar Bond offers 6.5 per cent interest - much higher than many products available in the market here.

WEDB is a Bangladesh Government product. NRBs and people of Bangladeshi origin and living abroad may purchase WEDB in Bangladesh Taka through four Janata Bank branches in the UAE.

These are available in three denominations - 25,000 taka, 50,000 taka and 100,000 taka.

"The maximum term is five years. A subscriber can show this as a deposit and could also take loans for up to 80 per cent of the total amount," Awal said.

Purchaser of WEDB can repatriate the principal amount of the bond in foreign currency. It also offers death-risk Benefit for up to 250,000 taka.

In case of premature encashment interest is paid at a lower rate.

"These days people usually queue up to buy WEDB, which is an excellent savings instrument for individual investors, professionals, small and medium entrepreneurs as well as families," he said.

A few year ago, the Bangladesh Government introduced US Dollar Bond and US Dollar Premium Bonds with a view to provide the highest profit or interest to NRBs.

For the US Dollar Bond, profit/interest is in US dollars or Bangladeshi taka, whilst for US Dollar Premium Bonds profit/interest is payable only in taka. At the option of the bond holder, repayment of the principal for either type of US Dollar Bond may be obtained in either taka or US dollars. Both bonds mature after a three-year term.

US Dollar Bond (like WEDB), also has a death-risk benefit for purchases of $10,000 and above. The entitlement is to have the death-risk benefit payable only in Bangladeshi taka converted at rates applicable at the time of payment.

NRBs can purchase US Dollar Bond and the US Dollar Premium Bond only from Janata Bank branches.

Other options

Apart from these two, a Bangladeshi expatriate can buy what is known as the Prize Bond - a 100-taka certificate, which does not give interest, but the buyer could win a monthly lottery that fetches up to 600,000 taka. However one has to buy it from Bangladesh Bank - the country's Central Bank. This is a safe option and could fetch luck.

"As more and more Bangladeshis enter the job market and as their salaries go up, we expect a larger number of investors to subscribe to these schemes," Awal said.

"Salaries of average NRBs have appreciated. We are seeing a strong reflection of that in their investment."

The Bangladeshi currency is not pegged, having been floated in the 1990s. During the last 35 years, the currency has been losing its value almost like the US dollar is losing its value in recent times.

However, in recent years, the taka appreciated against the US dollar (along with all the Gulf currencies) quite a few times. It appears that the decline of the currency of the world's biggest economy is faster than that of one of the world's poorest countries.

Despite that, officials at the country's exchequer failed to come up with a euro or UK pound denominated savings instrument - which, I'm sure, would have been more attractive.

Bangladeshi government officials need to be more creative in developing personal finance products, otherwise, it would lose a bit investment potential.