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National Savings Grow Financial Inclusion Stronger: New Islamic Products Set To Be Unveiled To Help Boost Country’s Islamic Finance Market

National Savings has appeared as a challengeable vehicle for financial inclusion with introduction of attractive welfare oriented products. It registered a large number of customers of which more than 50 percent were women. The efforts of National Savings are being actively supported by the World Bank and Karandaaz (DFID and Bill and Melinda Gates Foundation) through up-gradation of IT system, offering alternate delivery channels (cell phone, internet banking and ATM cards), Enterprise Resource Planning system (ERP), Business Intelligence, Data Warehouse, capacity building and training etc.

The efforts of National Savings in promoting financial inclusion have been lauded and recognized, not only nationally but also internationally. The reputed CFI magazine UK has recently bestowed on National Savings the award for “outstanding performance in promoting financial inclusion-2017”. The award is in fact a recognition of the progress made by National Savings in the last one year on the automation front with two third of the branches having been connected online and the offering of banking clearing services to customers.

After the successful roll out of Rs40,000 Premium Prize Bond (Registered), the Rs100,000 denomination bond was on the cards. The launch of Shuhada Families Welfare Account and extension of Behbud Saving Certificates for disabled persons was also coming up. Furthermore the Overseas Pakistanis Savings Certificates and Shariah Compliant Products were also being considered. For customer facilitation, SMS Service, access through social media and revamping of the institution’s website had been carried out.

A complaint cell had been established at the DG’s Office which disposed of public complaints on daily basis. The performance of the National Saving institution for has been praised for surpassing the annual savings target. The government continued support to National Savings in achieving the objective of greater financial inclusion.

There is harsh criticism that debt-to-GDP ratio has not gone beyond 60.2 percent. The saving to investment ratio is not adequate for achieving the required growth of 7 to 8 per cent. According to the authentic sources that Pakistan needs 25-30 percent saving to investment ratio to achieve the desired growth rate.

Although saving to investment ratio has increased from 12.6 percent to 15 percent but it is considerably less than the desired rate. In 2008, Pakistan’s debt-to-GDP ratio was 52.8 percent but it increased to 60 percent of the GDP in 2013. Pakistan’s debt stood at 60.2 percent. Pakistan’s per capita debt of Rs115,000 is the lowest in the world.

The world’s greatest economies are recognizing Pakistan’s pace of growth in the economy and the country would leave Canada behind by 2030. A step is being taken through amendment in the Companies Ordinance after 33 years to maintain global registration and a bilateral treaty in this regard has also been signed with the Swiss authorities. These measures have proved very important against tax evasion.


For the first time profit would be available on Rs40,000 bonds. National Savings has been catering to the woman consumers who constitute 50.26 percent of the total number. Restructuring of the National Savings is also under way and the organization would also take part in promotion of financial inclusion. It may be remembered that State Bank of Pakistan (SBP) is also partner of the Central Directorate of National Savings (CDNS) for issuance of registered bond.

The government has decided to exempt profits of National Savings’ Pensioners Benefit Account (PBA) and Behbood Savings Certificates (BSC) from the levy of 10 percent income tax. PBA and BSC are two National Savings schemes which cater to pensioners and widows and are exempted from withholding tax. The government has instructed the Federal Board of Revenue (FBR) to take appropriate measures to remove the anomaly in tax regime which resulted in taxation of yield on PBA and BSC.

Presently, holders of BSC get 9.36 percent rate of return per annum. On an investment of Rs100,000, the profit is Rs780 per month. This rate of profit has remained unchanged since October 2016. According to available data, the rate of return which was 14 percent from January 2014 to November 2014, with per month profit of Rs1, 170 declined to 9.36 percent to-date.

During 2016-2017, CDNS has taken numerous strategic level initiatives for both strengthening of the National Savings Schemes (NSS) and the Organization. Another historic milestone was on January 14, 2017, when CDNS became the only non-banking member of National Institutional Facilitation Technologies (Pvt.) Limited (NIFT) – the Banking Clearinghouse. With this initiative, the profits of NS investors can be collected into their respective accounts; thereby, offering safety and security, and access to ATMs & Internet & Mobile Banking offered by their banks. This has resulted in overall improvement in time for the collection of profits by the senior citizens through cheques from 5/10 days before to now 1/3 days.

On the automation side, the organization is going to complete digitization of more than 222 National Savings Centers (NSCs) across Pakistan. The third and the final phase of digitization will be initiated to complete 100 percent digitization of NSCs across the Country. A Data Centre/Warehouse and Disaster Recovery Centre will be established, Data Digitization and Documentation Management System along with the Business Intelligence framework will also be introduced.

National Savings is also coming up with numerous Alternate Delivery Channels (ADCs), like access of accounts by the investors through cell phone and internet, etc., which will act as cornerstone for achieving Financial Inclusion targets.

The project of NSC connectivity across the digitized offices has also been initiated. The product basket of National Savings Schemes (NSS) ranges from three months Short Term Savings Certificates to ten years long term Defence Savings Certificates. As of 3Ist March, 2017, the portfolio of NSS is Rs3,409,376.34 million which constitutes around 24 percent share of domestic debt and is also equal to 30 percent of total banking deposits.


The National Savings plan will help depositors put their cash into Islamic Shariah-compliant Ijara sukuk. The work is currently underway on its specifics like the price of the retail Ijara sukuk, its size, duration, maturity period and the mode of encashment during and at completion of the maturity period.

In this context millions of new accounts are expected to be opened, bringing a huge population of medium and small savers into the banking stream. Millions of others who are currently operating accounts in conventional banks and are receiving interest on their deposits may also be taken away by the NSS because of the rising religious sentiment to go Islamic.

In the event of introduction of Ijara sukuk in the NSS, some of these deposits are likely to be switched to this Islamic mode – Ijara sukuk. Extending Shariah-compliant modes to the NSS will be a big success of SBP’s National Financial Inclusion Strategy and its Vision 2020 to bring more and more new depositors into the banking fold.

According to recent reports the National Savings is expected to launch its first Islamic savings product by the start of 2018. The proposed product would begin with one year maturity and allow investors to earn monthly profit. The plan is to issue this product from the National Savings centers across the country. Investors can invest a minimum of Rs10,000 with no maximum investment limit. The government has given an in-principal nod for the launch of the new Shariah-complaint product which would need approvals from the federal cabinet before it’s put on offer in the market. The structure of the product has been developed. However, final rules and governance structure are currently being drafted. To structure and offer the new Shariah-compliant product under the aegis of the National Savings, certain amendments to the existing product offering structure needs to be carried out to comply with the principles of Shariah.

National Savings manages a portfolio which is around 30 percent of Pakistan’s total banking deposits, and serves more than seven million accounts/certificates holders. With respect to social security net, it fosters the needs of the most vulnerable and neglected segments of the society by offering preferential returns to widows, senior citizens, and retired persons. It operates more than 376 branches spread across the country, including far-flung areas.

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