Short-term investment: To encourage savings, govt launches new scheme
Returns of National Savings Scheme raised across the board.
ISLAMABAD:
As savings plunge to the lowest level in the country’s history, the federal government has decided to boost the savings level by launching short-term saving certificates with attractive returns, almost double the rates offered by most banks.
The short-term savings certificate with minimum investment of Rs10,000 for three months, six months and one year will be launched from Tuesday, announced Central Directorate of National Savings (CDNS) Director General Zafar Sheikh on Friday. The offered rate on short-term savings certificate will be 11.4% and will be linked with treasury bills. Average return offered by banks on savings accounts is 5% to 7% per annum.
The government has estimated that it will raise Rs35 billion from the newly launched scheme in the upcoming financial year. The total target for the National Savings Scheme has been set at Rs224 billion target for the fiscal year starting from July 1, 2012.
Meanwhile, the government has also raised the rates of all other certificates by an average 0.36% with effect from July 1. The increase has taken rate of Behbood Savings Certificates to 14.64% from the preceding 14.28%.
During the past few years, the NSS share in the market has significantly increased and its portfolio has crossed the Rs2 trillion mark while the numbers of accounts increased to seven million from three million.
Sheikh said the government will also launch Student Welfare Bond from August 14, 2012 by offering students a bond of Rs100 with a maximum prize of Rs700,000. He said the basic purpose of the scheme was to promote the culture of saving in the country.
For student welfare bond, the minimum investment limit will be Rs100 with first prize of Rs700,000, second prize Rs200,000 and third prize Rs1,000 for 1,199 students.
The saving schemes have become an important source of budget financing in recent years. The NSS raised Rs180 billion in the outgoing fiscal year.
Sheikh said that savings ratio in India stood at 26% of Gross Domestic Product while in Pakistan it has declined below 11% of GDP. “The savings-to GDP-ratio should be jacked up to at least 20% which can be achieved by introducing different products as well as qualitative human resource,” he added.
He also mentioned that CDNS has accomplished first phase of computerisation with 108 branches letting go of the paper-work culture and shifting to computers. The total cost of this was Rs398.6 million.
“The NSS has sought Rs1 billion more to implement the second phase and computerise the remaining 268 branches.
To a question, he said the NSS has proposed the government to slightly increase returns on all saving schemes as returns on prize bonds have also increased during the past couple of months. The saving schemes rates are linked with prize bonds rates.
Published in The Express Tribune, June 30th, 2012.
As savings plunge to the lowest level in the country’s history, the federal government has decided to boost the savings level by launching short-term saving certificates with attractive returns, almost double the rates offered by most banks.
The short-term savings certificate with minimum investment of Rs10,000 for three months, six months and one year will be launched from Tuesday, announced Central Directorate of National Savings (CDNS) Director General Zafar Sheikh on Friday. The offered rate on short-term savings certificate will be 11.4% and will be linked with treasury bills. Average return offered by banks on savings accounts is 5% to 7% per annum.
The government has estimated that it will raise Rs35 billion from the newly launched scheme in the upcoming financial year. The total target for the National Savings Scheme has been set at Rs224 billion target for the fiscal year starting from July 1, 2012.
Meanwhile, the government has also raised the rates of all other certificates by an average 0.36% with effect from July 1. The increase has taken rate of Behbood Savings Certificates to 14.64% from the preceding 14.28%.
During the past few years, the NSS share in the market has significantly increased and its portfolio has crossed the Rs2 trillion mark while the numbers of accounts increased to seven million from three million.
Sheikh said the government will also launch Student Welfare Bond from August 14, 2012 by offering students a bond of Rs100 with a maximum prize of Rs700,000. He said the basic purpose of the scheme was to promote the culture of saving in the country.
For student welfare bond, the minimum investment limit will be Rs100 with first prize of Rs700,000, second prize Rs200,000 and third prize Rs1,000 for 1,199 students.
The saving schemes have become an important source of budget financing in recent years. The NSS raised Rs180 billion in the outgoing fiscal year.
Sheikh said that savings ratio in India stood at 26% of Gross Domestic Product while in Pakistan it has declined below 11% of GDP. “The savings-to GDP-ratio should be jacked up to at least 20% which can be achieved by introducing different products as well as qualitative human resource,” he added.
He also mentioned that CDNS has accomplished first phase of computerisation with 108 branches letting go of the paper-work culture and shifting to computers. The total cost of this was Rs398.6 million.
“The NSS has sought Rs1 billion more to implement the second phase and computerise the remaining 268 branches.
To a question, he said the NSS has proposed the government to slightly increase returns on all saving schemes as returns on prize bonds have also increased during the past couple of months. The saving schemes rates are linked with prize bonds rates.
Published in The Express Tribune, June 30th, 2012.