National Savings Schemes – Higher returns for the consumer

national savings scheme

Under a revision of rates on 1st October, 2013, the government has increased the profit rates on National Savings Scheme certificates to attract more investment from the consumer segment of Pakistan. The revised rates are as follows:

Certificate Name

Old Rate (Applicable on all certificates   before 1st October, 2013

New Rate (Only effective for   certificates issued after 1st October, 2013

Special Savings Certificate



Real Income Certificate



Defence Savings Certificate



Pensioners Benefit Account



Behbood Savings Certificate



Savings Account



3 Month Savings Certificate



6 Month Savings Certificate



12 Month Savings Certificate




How does this affect the banking sector?

With the National Savings Scheme offering such high rates of return on its savings products, the consumer segment is bound to shift its deposits from the banking sector to government certificates. This will reduce capital liquidity amongst the banks in Pakistan; it would also further push them to offer higher rates of return on their savings and deposit products. With the flexible minimum deposit rate in place, the banking sector is being squeezed by the central bank of all its profit margins through government securities and is being forced to seek other sources of revenue; namely private sector lending and consumer finance.

The current revision in the National Savings Scheme profit rates is also in line with IMF conditions to tighten the noose around the banking sector of Pakistan and force them to induce private segment lending in the economy.

The consumer perspective

The rates offered by the National Savings Scheme are attractive for the consumer base in Pakistan; they exceed the rate of inflation in the country, thereby creating a real gain for the depositors in the long run. The Pensioners Benefit Account and Behbood Savings Certificate are especially attractive for individuals above 60 years of age and looking to park their life long savings, provident funds and gratuities for a risk-free handsome return. Though there is a cap of Rs.3 Million per individual for these respective products, the returns are still higher than those available in the banking industry.

For all other investors, the real income certificates and special savings certificates are offering returns higher than banking term deposits; therefore a viable investment opportunity for individuals seeking to park their wealth for fixed tenure and for higher returns.

Other than the attractive savings rates, the pressure created on the banking sector will allow consumers to avail various consumer finance facilities in the near future, at affordable markup rates. Given that the banking sector will seek revenue from private lending, the consumer finance segment is expected to flourish in Pakistan. This would allow individuals to avail car loans, credit cards, home loans, personal financing, at cheap markup costs and affordable terms and conditions.

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