Government raises profit rates on savings plans
The federal government on Friday raised profit rates on national savings certificates and schemes between 48 and 100 basis points.
In accordance with the new plan, the profit on the special savings certificates was increased by 100 basis points to 11%.
Similarly, earnings on regular income certificates increased by 0.84 basis points to 11.04%.
The interest rate on Bahbood cash certificates has been increased by 48 basis points to 12.72%
Earnings on Defense Savings Certificates rose 60 basis points to 10.92%.
The rate of return on the Retiree Benefits Account was increased by 48 basis points, from 12.24% to 12.72%.
However, earnings on savings accounts remained unchanged at 8.25%.
The government has revised rates upwards to absorb the benefit of an increase in its revenue from Pakistan Investment Bonds (PIB).
In February this year, the Central Directorate of National Savings (CDNS) reduced profit rates on all national savings schemes. However, he had increased these on savings bank accounts and cash vouchers.
It had reduced the profit rate on defense savings certificates to 10.40% from 11.12% set on December 10, 2021, a reduction of 72 basis points.
Yields on Behbood savings certificates were cut to 12.40% from 12.96%, down 56 basis points.
Earnings on Regular Income Certificates were reduced to 10.32% from 10.80%, down 48 basis points.
Yields on Special Savings Certificates and Special Savings Accounts were reduced from 10.40% to 10%, a reduction of 40 basis points. Profit on three-year special savings accounts was reduced by 20 basis points to 11.40% from 11.60%.
However, the yield on savings bank accounts was raised to 8.25% from 7.25%, up 100 basis points.
The profit on the Cash vouchers was increased to 9.68%.
In December last year, the government raised the profit rate on various certificates and national savings schemes by up to 240 basis points to pass on its increased income from BIPs and mobilize high investment in the savings products.
Read: Government Raises Profit Rates for National Savings Schemes
The Central Directorate of National Savings (CDNS), which offers savings plans to the general public, reinvests the funds received from savers in BIPs of 3 to 10 years.
A net divestment in savings schemes and premium bonds was observed as institutional investors continued to withdraw their investments at maturity as the government prohibited them from investing in the schemes.
Moreover, people were continuously cashing in price bonds having the denominations of Rs40,000, Rs25,000 and Rs15,000 because the government had discontinued them.
The CDNS manages an investment portfolio of approximately 7 million individual and institutional investors. The government uses the investments attracted by national savings accounts and certificates to cover its budget deficit.