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August 5, 2020

CDNS raises rates on savings certificates

Business

August 5, 2020

KARACHI: The Central Directorate of National Savings (CDNS) on Tuesday raised profit rates on the savings certificate investments second month in a row to mobilise funds from individuals.

The new rates are effective from August 4, according to a CDNS statement. Rate of profit on defence savings increased 34 basis points to 8.44 percent from 8.1 percent.

Rates on pensioner benefit account, Behbood savings certificates and shuhada family welfare account were up 36 basis points to 10.32 percent from 9.96 percent. Profit rate on regular income certificate was raised 12 basis points to 7.8 percent. That was compared to 7.6 percent earlier. However, profit rate on special savings certificates was reduced 20 basis points to 6.87 percent from 7.05 percent. Profit rate on saving accounts remained unchanged at 5.50 percent.

In July, profit rate on special savings certificate was also slashed by 10 basis points to 7 percent, and 100 basis points to 5.5 percent on savings account. Profit rates on other saving instruments were marginally increased with a smaller margin.

In the past, CDNS kept reducing rates of returns on saving certificates due to the declining secondary market yields on long-term Pakistan Investment Bonds and treasury-bills. New policy rate is scheduled in September – a long gap after last announcement in June as opposed to previous trend of back-to-back announcements in brief period of four months. The central bank slashed its key policy rate by cumulative 625 basis points to 7 percent since March.

CDNS manages portfolio of more than seven million investors. NSS provides risk-free and competitive avenue to all segments of the society, especially senior citizens, pensioners, widows, physically challenged persons, and family members of shuhada. It also provides a non-inflationary and cost effective borrowing to the government to bridge the overall fiscal deficit which ultimately reduces dependency on external borrowing.