ISLAMABAD, Dec 30: The profit rates for National Saving Schemes have been reduced by up to 84 basis points (bps) for the Jan-March quarter of 2012. The new rates will apply to all fresh purchases.

Although the interest rate has been kept unchanged by the State Bank, profit rates for the National Saving Schemes have declined because they are linked to 3-, 5and 10-year Pakistan Investment Bonds.

The new rate for Special Saving has been reduced by 83bps to 11.67 per cent, for Regular Certificates by 84bps to11.76 per cent and for Behbood and Pension Certificates by 54bps to 13.86 per cent. The rate for Defence Saving Certificates is down by 78bps to 11.90 per cent and that for profit and loss account by 25bps to 8.25 per cent. 'The NSS rates are determined by market forces and are in direct link with the PIBs,' said an analyst at the Karachi Stock Exchange.

He was of the opinion that the decrease in profit rates would benefit the government in terms of reduction in borrowings because lower amounts would have to be disbursed to the certificate-holders. The NSS investmenttarget for the current fiscal year is Rs185 billion.

The official said that because of declining investment opportunities in the country, including lack of interest of investors in the stock markets, National Saving Schemes were a major attraction for small and individual investors.

Despite a ban by the government on all financial institutions to invest in the NSS, investments in the schemes increased by 23 per cent to Rs65 billion during the July-October period, he added.

The total investment portfolio of the NSS has reached Rs1.3 trillion.