Positive Step Towards Promoting Savings Culture in Pakistan

Positive Step Towards Promoting Savings Culture in Pakistan

The Central Directorate of National Savings (CDNS) has announced a large rise in profit rates on all national savings plans, which is a positive development for Pakistan's small depositors. It is heartening to see the CDNS take efforts to assure greater returns for citizens while maintaining rates somewhat higher than the central bank's policy rates, especially with the State Bank of Pakistan (SBP) hiking its policy rate to an unprecedented 21%.


The increase in profit rates on various national savings schemes is a positive development that will provide a much-needed boost to savers in the country. The move also shows that the government is taking steps to promote a culture of saving, which is crucial for the long-term economic development of the country.


It is worth noting that the government is currently offering higher returns to secondary market players investing in Treasury bills and investment bonds, while paying lower returns to its own citizens. This disparity needs to be addressed, and the government should work towards providing equal opportunities for all investors, regardless of their status.


The substantial increase in profit rates on Defence Saving Certificates, Behbood Savings Certificates, Pensioners’ Benefit Accounts, and Shuhada Family Welfare Accounts is particularly note worthy. This will provide a significant boost to savers in these categories, who will now enjoy returns of up to 16.56%.


The rise in returns on Regular Income Certificates, three-year Special Saving Certificates, and Saving Accounts (running accounts) is also a positive development, as it will encourage more people to save and invest in these schemes.


The CDNS has taken prompt action to implement the revised rate sheets by dispatching them to all regional offices, along with instructions to issue existing blank special savings certificates, regular income certificates, and defence saving certificates at the new rates starting from April 10. This demonstrates the government's commitment to ensuring that citizens receive the benefits of the increased profit rates as soon as possible.


If we focus on other Asian countries “National saving Plans”.  In my mind first comes is INDIA, recently Indian  government  also raised interest rate on most post office saving schemes by up to 0.7 per cent for the April-June 2023 quarter in line with the firming of interest rates in the economy. While the interest rates for popular PPF and savings deposits have been retained at 7.1 per cent and 4 per cent, respectively, there has been an increase between 0.1 per cent and 0.7 per cent in other saving schemes, This statement was reported by finance ministry of India.


Overall, the increase in profit rates is a positive step towards promoting a culture of saving and investment. However, the government needs to address the disparity in returns and provide equal opportunities for all investors, which will ultimately contribute to the country's economic growth and development.