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| April 5, 2006 | Wednesday | Rabi-ul-Awwal 6, 1427 |
PM approves conversion of CDNS into corporation
ISLAMABAD, April 4: Prime Minister Shaukat Aziz has approved the conversion of Central Directorate of National Savings (CDNS) into a “corporation” which will now work under a proposed eight-member autonomous board. Informed sources told Dawn on Tuesday that the federal cabinet is expected to formally approve the new corporation — Pakistan Savings — in the next cabinet meeting after the prime minister returns from his visit of the US and Spain on April 8.
The head of the new corporation will be called the chief executive instead of the director general. The chief executive of the new corporation will also be one of the members of the policy board. The secretary finance will also be the member and the chairman of the board. Others members will include the economic advisor to the minister of finance, the additional secretary budget, ministry of finance and four other members to be taken from the private sector.
However, the cabinet division, sources said, has authorised the government to change the composition of the members of the policy board as and when required.
Pakistan Savings will have its own salary structure based on free-market mechanism and the authority to expand the organisation with a view to substantially increase and diversify saving products of the new organization.
Sources said that the CDNS, whose portfolio has increased from Rs80 billion to over Rs1 trillion along with 4 million plus clients, will enjoy considerable financial autonomy after becoming Pakistan Savings.
The government had restored last month the agency functions of all authorized banks to sell savings certificates of the Pakistan Savings.
The CDNS, which is currently fulfilling the requirement of deposit banking functions, is expected to offer good salary packages to the employees after it becomes Pakistan Savings.
The government, sources said, has also in principle, agreed that the new corporation could go into the mutual fund business to be managed by professional assets management companies having a private sector management. This mutual fund will be a subsidiary of Pakistan Savings for which the government will initially provide the equity.
The proposed Pakistan Savings will diversify its business and play an important role in resource mobilization and increasing the availability of domestic resources for investment.
The new organization will also allow introducing new products like offering funding for education, housing and marriages.
The ongoing pensioners and welfare schemes of the organisation are also likely to be further improved once the CDNS is converted into Pakistan Savings.
The sources said that about 25 per cent of the total portfolio of the CDNS belonging to institutional investment, including banks, has been rapid due to which there was some drop in the net portfolio.
The government is considering allowing the proposed Pakistan Savings to also work like other financial development institutions.
“A number of multi-dimensional targets and goals are currently being finalized which will be undertaken in the next six months,” a source said.
Presently, the CDNS is marketing only government securities through a network of some 350 branches. With significant reduction in return-on-fixed securities, brought about by market conditions, small savers were feeling frustrated as they have no access to those securities that offer better return.
Under the proposed programme, there will be an upgrading of all national saving centres across Pakistan through a detailed automation programme. The number of transactions have increased manifold that warranted automation as it is becoming increasingly difficult to achieve the desired result through manual handling of things.
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