KARACHI: The Central Directorate of National Savings (CDNS) and the Central Depository Company of Pakistan Ltd (CDC) will convert and issue National Savings Certificates (NSCs) in the digital form.

The two entities signed on Friday an agreement that’ll lead to the induction of NSCs into the Central Depository System (CDS) of the CDC, which already handles the electronic settlement of transactions carried out at the Pakistan Stock Exchange.

The federal government–run CDNS bypasses banks and directly generates deposits from the general public at rates of return that are pegged to the cut-off yields on government securities. As a result, ordinary people receive relatively better returns on their savings by eliminating the banks’ cut as intermediaries.

“The initiative is in line with the CDNS’s ultimate objective of the digitisation of NSCs. This platform will facilitate investors of NSCs, making it easier for them to invest in and maintain their NSCs in the electronic format, thereby promoting and harvesting the savings culture in Pakistan at the grass root level,” a statement quoted CDNS Director General Hamid Raza as saying.

Innovative, tech-based processes will lead to higher productivity, reduced turnaround times, lower costs and wider outreach, he added.

CDC CEO Badiuddin Akber said the core objective of establishing the CDC was to dematerialise — i.e. switch from paper certificates to electronic record-keeping — all types of financial instruments in Pakistan. The CDC has already dematerialised almost all types of securities, except NSCs. “It’s indeed the need of the hour that a mechanism be developed for investors to have NSCs in book-entry form,” he said while referring to the form of ownership that allows investors to own securities without a certificate.

Published in Dawn, August 13th, 2022