ISLAMABAD: The government on Monday launched four National Savings products in the Sharia-compliant mode with effect from July 1 at rates of returns being offered in percentages comparable with conventional banking rates.

The National Savings Organisation (NSO), a subsidiary of the Ministry of Finance, will formally launch the new products for the general public from July 1, said Finance Minister Ishaq Dar, while talking about the Sarwa Islamic Savings Products that include Sarwa Islamic Term Accounts (SITA) for one, three and five years and a running saving account.

The one-year SITA would be available to investors at a rate of return of 20.80pc, followed by 18pc for three years and 12.84pc for five years. The Sarwa Islamic Saving Account (SISA), a running account, would offer 19.50pc return. The products will be scriptless and their profits would be deposited in their bank accounts or National Savings Accounts through Raast accounts, as the case maybe.

The National Savings would soon launch NSS mobile application to enable account holders to remain updated about their accounts, besides allowing these products to be operated through debit cards and automated teller machines.

The finance minister recalled that the steps taken by the government during his previous 2013-2017 stint in office had expanded the Islamic banking system to 21pc of the total banking operations in the country.

While a Sharia-compliant bank was set up, two commercial banks have now converted to Islamic banking operations given the potential and strong leaning of the population towards interest-free financial system, he said.

He said that soon after taking over as finance minister last year, he was able with the government support to withdraw appeals filed by the State Bank of Pakistan and National Bank of Pakistan against the judgement of the Federal Shariat Court that ordered an end to interest-based financing and conversion of conventional system to Sharia-compliant financial system within five years.

He said the government had last year constituted a high-level steering committee of financial experts and Islamic scholars, which was led by the governor of SBP and supervised by himself (Mr Dar) with a mandate to ensure smooth transition to Sharia-compliant economy.

He said it was not possible to make overnight shift to such a large network that would take some time to transform, but at least “we would not be in war with the Almighty by continuing with interest-based financial system”.

The minister said he had promised in his budget speech to launch Islamic saving schemes by July 1 and the government was able to meet the first promise made in the budget while others budgetary commitments would be fulfilled in due course as required. He said it was for the first time that National Savings was introducing Islamic products.

Published in Dawn, June 27th, 2023