DWARFING any thriving commercial bank with its largest deposit base, the state-owned Central Directorate of National Savings (CDNS) hardly gives the impression of a modern day financial institution from the outlook of its branches and the pace and quality of service.

Sitting on deposits of more than Rs3.2tr, that account for almost one-third of the country’s total deposit base, the organisation is a classic case for reform — from its service to its staff and from technology to products and business culture: to serve better widows, pensioners, senior citizens, etc. The CDNS provides few choices such as fixed income, index linked products, prize bonds and welfare instruments.

The reform process is unavoidable given around 14pc of the national savings rate — almost half of Pakistan’s regional peers. Newly inducted director general Zafar Masood last week ordered the reorganisation of the CDNS Islamabad, Directorate of Inspection and Accounts (DIA) and the mergers of 12 regional directorates into four zones.

Sitting on deposits that account for almost one-third of the country’s total deposit base, the CDNS is a classic case for reform

As many as 18 posts of BPS-20 have been lying vacant for the last several years in the headquarters of the central directorate. None among the grade 19 officers of the department were eligible for promotion to grade 20 due to their low scores. As a result, no department officer has been eligible to be given the current charge of DG in grade 21 for the past almost three years.

In a selection process initiated by the ministry of finance — the parent ministry — no suitable candidate could be found for the post of director general even on a Management Pay Scale.

The ministry sought the prime minister’s permission for a private sector induc­tion with a market-based remuneration package of around Rs2m per month. The prime minister’s office sent its approval but wanted re-advertisement for competition. Mr Zafar Masood was hired from the private sector but without going through the competitive process.

The CDNS has a huge countrywide network of about 375 branches, but it does not own a single building anywhere in the country. Its entire 12 regional directorates are located in expensive private buildings. The CDNS headquarter itself is in a rented building in the heart of the capital, Islamabad.

The 12 regional directorates of national savings appear to be run through lower than designated posts — most of them in BPS-18 against BPS-19 posts. One of the most important posts — director schemes CDNS — has been looked after, for more than one year, by a junior officer. The post is important for initiating new schemes and addressing depositor’s complaints.

The Regional Directorate, Peshawar, is also headed by a grade-18 officer against a grade-19 post. The post of joint director Quetta is filled by an 18 grade officer. Interestingly, a BPS-18 officer has now been posted against a grade-19 post of the joint director Karachi.

From an investment point of view Karachi is the most important region comprising 33 branches. A few Grade-19 officers have be sent on management courses with proper replacements as about 144 branches in three key regions are without a proper joint director.

The situation at the second most important office — directorate of inspection and accounts — is no different. The senior most post of director is being run by a junior and kept understaffed, but monopolised, by a few who have been there for more than 20 years. The audit function remains sub-par.

There are examples of officers who never go out of one branch to another or from one region to another, creating stagnation. Moreover, large physical cash collections and transfers are still being transported through private vans without proper security as in the banking sector.

Mr Zafar Masud, however, said his initial observations of the new organisation are positive with positive people ready to accept the next generation of reforms. Among his priorities is to reinforce the information technology backbone and modernise services through ATMs and cell-phones for real time data access.

He said system processes need to be improved and existing staff to be trained on the pattern of commercial banks.

He agreed that about 30pc of the country’s total deposits were with the CDNS but its workforce had to bank on old registers and hence service delivery could only be improved through automation.

“Despite all these constraints, the customer service of CDNS was still far better than commercial banks”, said Mr Masud who himself came from a private bank.

On top of that, the outlook and locations of the branch network have to be improved and given a modern look, but more than that, virtual accessibility was very important. Moreover, given the social security the institution offered and financial inclusion it provided, the CDNS would continue to keep an eye on small savers, normally not served by commercial banks due to service cost.

He said it was a misconception that too many senior positions in 19 and 20 grades were vacant saying there were enough people against those positions but the organisation would need to invest more in skills development. A few monopolies or concentration of officers have also been taken care of, he said.

Published in Dawn, Business & Finance weekly, November 21st, 2016