Savings schemes: Govt reduces profit rates
Decision is taken in response to a reduction in discount rate by the State Bank of Pakistan.
ISLAMABAD:
In response to a reduction in discount rate by the State Bank of Pakistan, the federal government has revised downward profit rates on national savings schemes for investment made from January 1, 2013. In a statement, the Central Directorate of National Savings said the revision was made in the backdrop of current market scenario and in accordance with the government’s policy to provide market-based competitive rate of return for investors. New rates for Special Savings Certificate, Regular Income Certificate, Defence Savings Certificate and Savings Accounts are 9.80%, 10.368%, 10.84% and 6.65% respectively. Rates for short-term Savings Certificates of three months, six months and one year have been fixed at 8.85%, 8.90% and 8.95% respectively. Profit rate for specialised savings schemes like Behbood Savings Certificate and Pensioners’ Benefit Account has also been revised and fixed at 12.72%.
Published in The Express Tribune, January 2nd, 2013.
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Market rules say that with the increase of money supply ( or reduction in demand for money, or loan ) requirement to mobilise money reduces and will result in reduction of profit rate.Trend of saving increases when the return on the saving is higher than the rate of inflation. ( If rate of inflation is higher, investment will be preferred be it real estate, equity market or bullion, over the savings. These are the usual steps for maximizing the return in short or long run which will be visible.