THE rate of inflation prevailing in the country is showing an upward trend. Now, even the discount rate is on the rise at regular intervals to curb the galloping inflation.

Banks are also increasing their lending rates in tandem with the prevailing discount rate, while reducing the profit rates on deposits of various tenures; thereby denying any benefit to the depositors at large.

With banks' spread showing an increase, it is the banking sector which, in fact, is making hay while the sun is shining. No effort is being made by the SBP to ensure that the depositors receive a commensurate rate of profit, matching the rate of inflation to a larger extent.

Likewise, the government's National Savings Schemes, which used to be a great comfort to the general public in the not too distant past, have also failed to deliver by not ensuring a better rate of return to the savers.

No doubt, with such a negative rate of return, our country's savings are at a dismally low level to the GDP.

It is now pertinent that the ministry of finance and the State Bank should look into this scenario dispassionately and announce an increase in the rate of return on the various schemes of National Saving Certificates by a minimum two per cent per annum to mitigate the high rate of inflation.

Under the present scenario, it is the pensioners, the senior citizens and the widows who in the absence of any matching social security net by the government are left with no alternative than to request the authorities concerned to increase the rate of profit on Behbood certificates to 17 per cent per annum on a compound basis so that they too do not fall into a poverty trap in times to come.

A decade ago a 10-year-tenure Defence Certificate used to fetch 18 per cent on a compound basis and there was no upper threshold limit of an individual's investment of Rs3 million that is now in vogue under the Behbood certificate.

ABDEALI NAFAR
Karachi