The government increases the profit rates of national savings plans

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KARACHI:

The government has increased the rate of profit of various national savings certificates and plans up to 240 basis points to pass on the benefit of its rising Pakistan investment bond (GDP) income and to mobilize significant investment in government bonds. savings products.

The Central Directorate of National Savings (CDNS), which offers savings schemes to the general public, reinvests funds received from savers in 3 to 10 year BIPs.

“Benchmark 10-year GDP yields (return on investment) have increased by around 200 basis points over the past six to eight weeks,” said Tahir Abbas, research director of Arif Habib Limited (AHL ), in an interview with The Express Tribune. CDNS, which reports to the Ministry of Finance, has announced that it will increase the rate of profit on Bons Spéciaux d’Épargne (CÉ) from 240 basis points to 10.6%.

Regular Income Certificates (RICs) saw their rate of return increase 204 basis points to 10.8%.

The yield on the Behbood Savings Certificate (BSC) jumped 192 basis points to 12.96%.

Management also raised the profit rate on Bons d’Epargne Défense (DSC) from 161 basis points to 10.98%.

Net investment in all cash certificates and priced bonds remained negative at 78.88 billion rupees in the first four months (July-October) of the current fiscal year 2021-22, according to data updated Monday by the central bank.

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Net divestments in savings plans and priced bonds are seen as institutional investors continue to withdraw their investments at maturity as the government has banned them from investing in the plans.

In addition, people are continually cashing in price bonds with the denominations of Rs 40,000, Rs 25,000 and Rs 15,000 because the government has removed them.

Abbas said that increasing the rate of return on savings plans could not massively harm investments in the Pakistan Stock Exchange (PSX), as institutional investors are no longer allowed to invest in savings plans. Individual investors, however, can shift part of their investment from the stock market to fixed-return savings instruments.

CDNS manages an investment portfolio of approximately 7 million retail and institutional investors. The government uses the investments attracted by national savings accounts and certificates to fill its budget deficit.

Posted in The Express Tribune, December 10e, 2021.

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