ISLAMABAD: Amid a hike in the central bank’s policy rate and the recent surge in secondary market coupon-cut yields, the Central Directorate of National Savings (CDNS) on Monday raised profit rates on all national savings schemes.
The new rates would apply to deposits and savings/investment certificates made on or after May 10. The State Bank of Pakistan had raised its bank rate by 250 basis points to 12.25% on April 7 and since then has cut Treasury bond yields. and Pakistan’s investment bonds hit a record high of 15%. Inflation as measured by the consumer price index (CPI) hit a two-year high of 13.4% in April.
The yield on savings accounts and certificates is linked to central bank policy rates and is normally kept slightly higher to attract small savers without significantly affecting the government budget. The government had increased profits on savings schemes in recent months after peaking in December last year.
According to a series of notifications issued by the Ministry of Finance, the CDNS has increased the profit rate on the one-year Defense Savings Certificate (DSC) to 8% from the current 5%.
Similarly, the yields of Behbood Savings Certificates, Behbood Retired Account, Retired Savings Certificate and Shuhadas Family Welfare Account were also increased by 1.44 basis points to 14.16% from 12 .72% currently.
The yield on regular income certificates increased by 12% from 11.04%, up 0.96 bps. The profit margin on Special Savings Certificates and Special Savings Accounts (6 months to 30 months duration) was also increased to 12.40% from 11% currently, showing an increase of 1.40 basis points . The savings account yield was improved by 250 basis points to 10.75% from 8.25% currently.
CDNS sent revised rate sheets to all regional offices with instructions that the existing stock of blank Special Savings Certificates, Regular Income Certificates and Defense Savings Certificates would henceforth be used by affixing stamps rubber with Issue61, Issue65 and Issue61, respectively, as well as revised rate before issue.
National Savings Scheme rates are usually announced every two months and are linked to the limit yield of Treasury bills and long-term Pakistani investment bonds. The latest treasury bill yields stand at around 14.50, 14.79 and 14.53 pc over 3 months, 6 months and 1 year, followed by the GDP yield at 13.16 pc, 12.70 pc and 12.81 pc over 3 years, 5-years and 10 years.
Posted in Dawn, May 10, 2022