On various national saving certificates, the federal government has raised the rate of profit in a range of 12-96 basis points partially to attract higher investment in government papers and partially to pass on the value of increased returns from Pakistan Investment Bonds (PIBs).
Within the framework of the Ministry of Finance, the Central Directorate of National Savings (CDNS) reinvests funds earned from retail investors into three to ten-year PIBs.
Till date, in the first five months (July-Nov) of the current fiscal year, the CDNS has mobilized a meagre investment of Rs28.68 billion compared to Rs371 billion in the previous full fiscal year 2020, according to the State Bank of Pakistan.
In addition, the government discontinued prize bonds of Rs40,000 each and Rs25,000 each. This has partly offset investment growth in national savings certificates.
“Profit rates on certificates for national saving schemes have been revised upwards by 12-96 basis points. In Behbood and Regular income certificates, the highest increase was seen by 96 basis points each to 11.28 percent and 9.00 percent, respectively,” CDNS reported by the research house Arif Habib Limited (AHL).
The annualized rate of profit on Defence Saving Certificates (DSC) has also been boosted to 9.24 percent by 75 basis points. Revised by 20 basis points to 7.80 percent, the rate of return on Special Savings Certificates (SSC). And the profit rate of 6.92 percent on Short Term Saving Certificates (STSC) increased by 12 basis points.
Because of the downward trend in the rate after March 2020, people apparently invested small amounts in the saving scheme and they decided to hold cash in hand during the Covid-19 pandemic to deal with any untoward situation.
Profit will be received by the new investors according to the new prices.
The investment portfolio of about seven million individual and institutional investors is managed by CDNS. However, the government has recently banned investment in savings accounts and certificates by institutions.
