ISLAMABAD: Amid higher policy rate of the of the central bank’s and recent surge in cut-off yields of secondary market coupons, the Central Directorate of National Savings (CDNS) on Monday increased profit rates on all national savings schemes.

The new rates would be applicable to deposits and saving certificates/investments made with effect from May 10. The State Bank of Pakistan had increased its discount rate by 250 basis points to 12.25pc on April 7 and since then cut-off yields on treasury bills and Pakistan Investment Bonds have touched a record 15pc. Inflation measured by Consumer Price Index (CPI) peaked to a two-year high of 13.4pc in April.

The return on saving accounts and certificates are linked with the central bank’s policy rates and are normally kept slightly higher to attract savings small savers without drastically affecting the government budget. The government had been increasing profits on savings schemes over the past few months after reaching a peak in December last year.

According to a series of notifications issued by the Ministry of Finance, the CDNS has increased the profit rate on one-year Defence Savings Certificate (DSC) to 8pc from 5pc at present.

Likewise, the returns on Behbood Saving Certificates, Pensioner Behbood Account, pensioner saving certificate and Shuhadas Family Welfare Account have also been increased by 1.44bps to 14.16pc from 12.72pc at present.

The return on Regular Income Certificates was increased 12pc from 11.04pc, up 0.96bps. The profit margin on Special Saving Certificates and Special Saving Accounts (6-month to 30-month tenor) were also increased to 12.40pc from 11pc at present, showing an increase of 1.40bps. The return on saving account was enhanced by 250bps to 10.75pc from 8.25pc at present.

The CDNS has dispatched revised rate sheets to all the regional offices with instructions that existing stock of blank special savings certificates, regular income certificates and defence saving certificates would now be used by affixing rubber stamps with Issue61, Issue65 and Issue61, respectively, along with revised rates before issuance.

The rates of national savings schemes are usually announced after every two months and are linked to cut-off yield of T-bills and long-term Pakistan Investment Bonds. The latest T-bill yields stand at about 14.50, 14.79 and 14.53pc on 3-month, 6-month and 1-year, followed by return on PIBs stand at 13.16pc, 12.70pc and 12.81pc on 3-year, 5-year and 10-year.

Published in Dawn,May 10th, 2022