ISLAMABAD, Sept 30: The government on Saturday lifted its ban on institutional investments in National Savings Schemes (NSS) after bringing its rate of return on a par with open market.

Institutional investment in the NSS was banned in March 2003, after the government suffered massive losses while paying high rate of returns on bulky investments from institutions. With no chances of losses and a very high rate of return, the NSS served as a safety cushion for institutions but proved lethal to the national exchequer.

“With immediate effect, the government has allowed unlimited investments from institutions in the NSS,” director-general of the Central Directorate of National Savings (CDNS) Ahmed Owais Pirzada, announced here at a press briefing.

Institutions would now be able to invest in all saving schemes except the Pensioners’ Benefit Account and Bahbood Savings Certificates.

The decision is part of the overall reform process the government has initiated in the saving schemes that also includes automation of all its offices and computerisation of records. The government has so far provided Rs200million to the NSS for implementation of the reform process that would be completed by the end of next year.

From Monday, all non-profit bodies, registered charities, public sector enterprises (excluding banks), private educational and health institutions, employees old age benefit institutions (EOBIs), private corporate sector (excluding banks) and non-banking financial institutions (NBFIs), excluding insurance companies, are eligible to invest in NSS.

Mr Pirzada said that efforts were also being made to encourage investments in national savings from the Middle East from where only Rs7 billion have so far channelled into these schemes.

“But, the potential in the Gulf countries is far greater,” he said, adding that the coverage of the international investment would be extended to other countries as well.

The NSS is holding a major share in national savings and currently its total deposits have risen to Rs1 trillion by comparison with the combined deposits of all domestic commercial banks amounting to Rs2.8 trillion.

The government hopes that the move would contribute towards the swelling of the overall portfolio of the NSS. But, the institutions could only invest in schemes like defence savings certificates, special saving certificates (registered) and accounts, regular income certificates and saving account on which the rate of return was almost equal to that of the open market.