ISLAMABAD, Sept 30: The government on Monday announced a nominal increase in the rates of profit on various National Savings Schemes (NSS) in a bid to offer competitive rates to prospective investors.
The rates are revised as per policy of reviewing the rates every quarter by the Central Directorate of National Savings (CDNS) which will come into effect from October 1, 2013.
As per decision, the rates for three year Special Saving Certificates were increased to 11pc from 8.9pc, an increase of 2.1pc; the rate for five-year regular income certificate was edged up to 11.40pc from 9.48pc, an increase of 1.92 pc.
Similarly, the rate on Defence Saving Certificate has been increased to 11.87pc from 10.36 pc, showing an increase of 1.51pc, while the Saving Account holders would now be rewarded with a rate of return of 7.5pc from earlier 6pc.
The rates on Pensioners Benefit Accounts and Bahbood Saving Certificates have also been raised from 12.24 pc to 13.68 pc.
For the three months short term certification, rate was increased to 8.85 pc from 8.4pc; short term six month certificate the rate was increased to 8.95 pc from 8.50pc and on one year certificate the rate was increased to 9pc from 8.55 pc, respectively. Experts believe increase in rates of saving certification was necessitated by the government desire to rely on non-bank sources of financing and lowers its dependence on the banking system especially the central bank to meets its fiscal deficit.
This policy may help the government to ease inflationary pressures in the economy and also meet the IMF condition under the IMF extended loan project to reduce Islamabad borrowing from the State Bank to a certain extent.
In this context, the nominal increase in the profit rates of the saving certificates could also somewhat improve the domestic saving rate of the economy by making the real rate of return on deposits less negative, check depreciation of rupee and possibly increase the flow of fund from abroad due to relatively better rate of returns in Pakistan.
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