ISLAMABAD, Feb 27: The ministry of finance has decided to convert the Central Directorate of National Savings (CDNS) into an autonomous Pakistan Savings, expected to be formally approved by the federal cabinet in its next meeting.
Official sources told Dawn on Tuesday that a high-level meeting presided over by Prime Minister’s Advisor on Finance Dr Salman Shah last Saturday, gave a final ‘go-ahead’ for the conversion of CDNS into Pakistan Savings with a view to enlarge its functions and offer increased salaries to its employees.
The complete restructuring of CDNS has also been proposed to be achieved by June 30, 2007 for which the consultants of the organisation - M/s Sadat Haider Murshad of Karachi - were asked to put up its plan shortly.
Prime Minister Shaukat Aziz had given in principle approval to establish Pakistan Savings about 15 months ago, but no decision was being taken due to one reason or the other by the concerned officials of the ministry of finance.
The meeting also directed the officials of the Pakistan Post Office to complete its stock reconciling and auditing of account “within 60 days” failing which its agency functions, being conducted on behalf of CDNS, will be cancelled.
“A letter has been issued to the Pakistan Post to comply with the orders of the Finance Division to avoid any action,” a source said adding that the meeting agreed with the CDNS that in case of delay, the supply of stocks to the Post Office be stopped. Stock reconciliation, he said, was an important issue which was not being seriously taken by the Pakistan Office which warranted certain action.
Sources said that once the CDNS was converted into an autonomous body, its affairs will be supervised by a Board of Directors to be headed by the secretary finance of the federal government and would include secretaries establishment, Economic Affairs Division (EAD), deputy governor State Bank of Pakistan (SBP), additional secretary budget of the ministry of finance and one ex-banker of the national repute as its members.
Presently, the CDNS is marketing only government securities through a network of some 320 branches. With significant reduction in return on fixed securities brought about by the market conditions, small savers were feeling frustrated as they have no access to those securities that offer better return.
Under the proposed restructuring programme, there will be an upgradation of all the national saving centres across the country through a detailed automation programme. The numbers of transaction have increased manifold that required automation as it was becoming increasingly difficult to achieve desired results through manual handling of things.
CDNS, whose portfolio has increased from Rs80 billion to Rs1 trillion along with 4 million plus clients, is expected to enjoy the considerable financial autonomy after having been converted into Pakistan Savings.
The CDNS, which was fulfilling the requirement of deposit banking functions, will have its pay scales revised upward with a view to offer good salary packages to the employees.
A decision has also been taken to launch a "Mutual Fund" to be managed by professional assets management companies having a private sector management. This mutual fund will be a subsidiary of the proposed Pakistan Savings for which the government will initially provide the equity.
Pakistan Savings, sources said, will diversify its business and play an important role in resource mobilisation and increasing the availability of domestic resources for investment.
It will also be allowed to introduce new products like offering funding for education, housing and marriages.
The ongoing pensioners and welfare schemes of the organisation will be further improved, sources said. He pointed out some of the new schemes were also expected to be introduced.
It was said that 25 per cent of the total portfolio of the CDNS belonging to institutional investment including banks has been repaid by the CDNS due to which there was some drop in the net portfolio.