ISLAMABAD, March 5: Internal differences in the ministry of finance has delayed the promulgation of the much-awaited presidential ordinance to convert Central Directorate of National Savings (CDNS) into the proposed “Pakistan Savings Corporation” aimed at introducing new saving instruments.

Sources told Dawn on Wednesday that the file was still lying in the President House due to the differences between the finance minister and the finance secretary with the result the “new saving policy” has also been delayed.

However, the sources said now the ordinance was expected to be promulgated by the president with the consent of the new government. The ordinance initially seeks to launch four fresh products, which include the beginning of formal banking by the new corporation, an asset management company, issuance of Shariah-compliant bonds and using the remittances of the overseas Pakistanis.

Once this ordinance is promulgated the proposed Pakistan Savings Corporation will be classified as an absolute government savings bank, a source said.

The new proposed savings policy also seeks to raise the current level of national savings from 18 per cent of the GDP to 23 per cent as was done by many developing countries.

“Ten-year yield on Pakistan Investment Bond (PIB), on which the government borrows, has increased from 10.20 per cent to 11.40 per cent. But now we have formulated a policy under which national saving department will offer long-term financing to the government on lower interest rate,” a source said.

The objective of introducing new products, he said, is to help the government to seek from the new corporation cheap funding even on lower mark up that is currently being offered by the central bank.

The proposed Pakistan Savings Corporation was being structured to also offer increased rate of profit on various saving schemes.

It will be offering new instruments, which are savings schemes in real sense. The corporation will be 100 per cent owned by the government of Pakistan.

The proposed corporation plans to formally entering into banking field to provide cheque books to its customers. It will be at par with banks soon as far as offering better rate of profit to the clients is concerned.

Sources said that the new corporation would offer better interest rate than 5-6 per cent of the banks. Higher authorities had been convinced that CDNS, after its conversion into the corporation, will have to offer better rate of interest to its clients if at all GDP saving rate was to be increased in the country.

The plan also included the facility of Automated Teller Machine (ATM) to the customers. For the first time current account banking scheme will offer certain rate of return, the details of which had been finalised and would be known to the public shortly.

The facility of lockers will also be available under a new programme that contained in the new policy. Under the new policy ‘domestic sukuk’ will also be issued.

The sources said negotiations were being completed with Western Union to buy its franchise in Pakistan. “Through this franchise, we will directly be receiving dollars from overseas Pakistanis and will pay them back in Pak rupee with good profit,” a source said, adding that the scheme was so attractive that they will prefer to invest in the proposed corporation.

The sources said that the number of branches of the CDNS has been planned to be increased from 370 to 500 by 2009.

Presently, the CDNS is marketing only government securities.

With significant reduction in return on fixed securities, brought about by the market conditions, small savers are feeling frustrated as they have no access to those securities that offer better return.

The ongoing pensioners and welfare schemes of the organisations are also expected to be further improved once the CDNS is converted into a corporation.