What is a DPS?
DPS stands for deposit pension scheme: in plain terms, a monthly savings plan. Instead of one large sum, you pay a small fixed amount into the bank every month for a number of years. At the end, you get back everything you paid in plus interest, all together.
It is a bit like dropping coins into a clay piggy bank, except the bank holds the money and pays interest on it. Having to pay in every month is what helps many people build a saving habit.
Say Sumaiya wants some money ready in five years for her daughter’s school admission. She has no large sum now, so she opens a DPS of Tk 1,000 a month. Over five years she pays in Tk 60,000 herself; at the end she gets that back with interest added.
How it works
You choose a monthly instalment (for example Tk 500, Tk 1,000 or Tk 5,000) and a term (commonly 3 to 10 years, sometimes longer). Each instalment is due by a set date every month; many people arrange for it to be taken automatically from their savings account.
The rate is set on the day you open it. Each instalment earns interest from the date it is paid, and interest is added on interest (compounding). So the early instalments grow for longest, and the total visibly speeds up towards the end.
Banks usually give you a table when you open it: so much a month, for so many years, roughly so much at maturity. Check whether that figure is before or after tax, and note that it assumes every instalment is paid on time.
Paying Tk 2,000 a month for 5 years, you put in Tk 120,000 in total. At 8% a year compounded monthly, the maturity value before tax is about Tk 147,900, so the interest is about Tk 27,900. After 10% tax at source you receive about Tk 145,100. At 6%, the same plan would give about Tk 140,200 before tax. The rates are only examples.
What happens if you miss instalments
The rules differ by bank, but the general picture is this: a late instalment may attract a late fee or reduce the maturity amount. If several instalments in a row are missed (two or three at many banks), the DPS may be suspended or closed.
If it is closed, you get your deposits back, but interest is usually worked out under the early-closure rules, at a lower rate.
Closing it early
At many banks, closing within the first year earns no interest: you get only your deposits back. After a year, interest is usually paid at less than the agreed rate (at some banks the savings rate, at others one or two percentage points below the agreed rate).
If you suddenly need money, many banks let you borrow a large share of what you have paid in (often 80–90%) instead of closing the DPS. The loan rate is higher than the DPS rate, so work out the cost first.
Common variations
- Goal-based DPS
- A DPS sold under the name of a goal such as education, marriage, Hajj or retirement; the arithmetic inside is the same.
- Lakhpati or kotipati DPS
- Built around reaching a round sum at maturity; see the special savings schemes page for how to read them.
- Islamic monthly savings schemes
- Run on a mudaraba basis; the profit rate is provisional at first and finalised later.
- DPS through mobile apps
- Mobile wallet apps let you open a DPS with a partner bank or finance company; the key question is which institution holds the money.
How protected your money is
A bank DPS is covered by the Deposit Protection Act 2026: if a bank is closed, each depositor should get back up to Tk 2 lakh, counting all their deposits at that bank. A DPS with a finance company is due to come under this protection only from July 2028.
What return to expect
DPS rates usually track the same bank’s FDR rates. While interest rates were capped from 2020 to 2023, many banks paid around 5–7%. After rates were left to the market in 2024, many banks’ DPS rates rose to 8–11%; in early 2026, DPS offered through mobile wallet apps paid roughly 8.5–9.75%.
The rate at opening usually holds for the whole term, so when you open it matters for years. To see your real gain, take out tax and inflation.
Why people choose it
- You can start with a small amount; no lump sum is needed.
- The required monthly payment builds a saving habit.
- The rate is usually well above a savings account and is fixed at the start.
- You can borrow against it instead of closing it.
Points to weigh
- Missed instalments can bring penalties or closure.
- Closing early cuts the interest sharply, often to zero in the first year.
- Over a long term, high inflation can make the real return small or negative.
- The advertised maturity figure may be before tax.
Tax
The bank deducts tax at source when it pays interest or profit. Under the Income Tax Act 2023, in recent years this has been 10% if you have a TIN and 15% if you do not; the annual Finance Act can change these rates.
In recent years, up to Tk 1.2 lakh a year paid into a DPS has counted as an investment eligible for the tax rebate. If you file a return, this can reduce your total tax somewhat; the limit and rules can change in the Finance Act.
Once the balance crosses a threshold, excise duty is also deducted once a year; the threshold is set in the Finance Act.
Tax rules can change with each year’s Finance Act. Before a big decision, check the latest rules or speak to a tax adviser.
How to get started
- Choose a bank; look at its financial health as well as its rate, because the money will stay there for years.
- Pick a monthly amount you could still pay in a bad month.
- Documents: national ID card, photographs, your nominee’s ID and photograph, and your TIN certificate if you have one.
- Set up automatic payment of the instalment from your savings account.
- Get the rules on missed instalments, early closure and loans in writing.
Check before you start
- Can I pay this amount every month for the whole term?
- Is the maturity figure before or after tax?
- Do I know how many missed instalments close the account?
- How much interest would I get if I close it in the first year, or halfway?
- Which institution holds the money: a bank or a finance company?
- Is a nominee properly recorded?