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| July 12, 2003 | Saturday | Jumadi-ul-Awwal 11, 1424 |
CDNS may be made corporation
ISLAMABAD, July 11: The government is considering turning the Central Directorate of National Savings (CDNS) into an independent corporation to make it more effective for selling new savings instruments.
Official sources told Dawn here on Friday the Asian Development Bank (ADB) “has promised to provide financial and technical assistance” to help convert the CDNS into an independent corporation, preferably before December 2003.
The government would soon be announcing a plan to start a reforms process in the CDNS so that it could attract more investment through the sale of new instruments.
“We are considering various options, including the conversion of CDNS into an independent and financially strong corporation,” said a senior official of the ministry of finance.
When contacted, he said the donor agencies, especially the ADB “have offered to help restructure the CNDS” to make it a more useful organization.
He also informed that the ‘Behbood Account’ for widows was being opened in 336 branches of the CDNS across the country. The organization will offer 10.08 per cent interest rate to the holders of these accounts.
The CDNS has generated Rs3 billion through the sale of pensioners accounts. In this case, too, the holders have been offered 10.08 per cent interest rate, he said.
Once the CDNS is converted into an independent corporation, new schemes carrying better rates of profit will be launched with the approval of the federal cabinet, the sources said.
The purpose is to encourage savings which, as a percentage of GDP, rose from 17.0 per cent in 2001-02 to 19.2 per cent in 2002-03 mainly on account of a significant improvement in the current account balance. This eliminated the need for having recourse to foreign savings to finance domestic investment.
Domestic savings as a percentage of GDP averaged 15.7 per cent as against an average of 19.9 per cent in the 1990s.
Earlier, the overseas Pakistanis had purchased special saving certificates and special defence certificates worth over Rs600 million in December 2002.
The National Saving Schemes (NSS) are domestic debt instruments, geared towards retail investors and administered by the CDNS.
Currently, there are six long-term schemes with maturities ranging from 3 to 10 years. Given the high NSS interest rates that exceed the rates of other government securities, the share of the NSS borrowing in domestic debt has been constantly increasing (from 33 per cent in 1996-97 to 46 per cent in 2000-2001).
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