INVESTMENT IN NATIONAL SAVING SCHEMES
An Avenue of Sheltered Investment
MUHAMMAD AQEEL KHAN,
July 30 - Aug 05, 2007
The history of National Savings Organization dates back to the year 1873 when the Government Savings Bank Act, 1873 was promulgated. During the First World War, the British Government introduced several Schemes for collection of funds to meet the expenditure. During the Second World War, Post Office Defence Savings Certificates were floated. The need to setup a separate agency was felt and a National Savings Bureau was established in 1943- 44 as an attached department of the Ministry of Finance of the undivided Government of India. At that time the main functions of the Savings Department were to initiate all policy matters and issue directives for the execution of policy decisions of the Central Government, and to review the Savings Schemes from time to time.
At the time of Independence an organization with the name of 'Pakistan savings Central Bureau' was created and the Savings work was entrusted to it by the Government of Pakistan.
The National Savings Organization is playing an important role in mobilizing domestic savings through various national savings schemes, which provide an incentive to savers through handsome return on their savings. It is in our individual interest as well as in the interest of the country, to inculcate the saving habit through investment in the national savings schemes. The certificates and accounts offered by NSS are as follows:
OFFERINGS - SCHEMES AND CERTIFICATES
NSS offer various Schemes and Certificates apprehended below:
* Defense Saving Certificates (DSC)
* Special Saving Certificates Registered (SSCR)
* Regular Income Certificates (RIC)
* Behbood (Welfare) Savings Certificates (BSC)
* Savings Account (SA)
* Special Savings Account (SSA)
* Pensioner's Benefit Account (PBA)
Government of Pakistan's trying to structure the saving rates on modern lines and to make it customer-friendly to encourage savings in the country. In the budget for the current FY 07-08, the government had announced a substantial raise in the National Savings Schemes (NSS). The rates of return on NSS raised by up to one percentage point and the increase were seen a bit above the market rates. These rates are linked to the yields on long-term Pakistan Investment Bonds (PIBs). The Federal Government has revised upwards the rates of return on National Saving Schemes (NSS) with effect from June 23; 2007.
Following table depicts the increase in rates on various saving schemes.
NATIONAL SAVINGS SCHEMES
Defense Saving Certificates
Special Saving Certificates
Regular Income Certificates
Behbood (Welfare) Savings Certificates (BSC)
Savings Account (SA)
Major increase in the rate was observed in saving accounts where rate of return is being raised by 6.00% to 6.50%, which shows growth of 8.33%. Behbood and pensioners scheme rates are revised up by 11.25% to 11.64% an increase of 3.47%.
GROWTH AND ACHIEVEMENT
The National Savings Organisation has been successful to achieve the target given by the government. The target for the fiscal year 2006-07 was earlier Rs.14 bn, which was later increased to Rs.50 bn. till end May 2007, the net achievement works out to Rs. 55 bn which is 110 per cent of the total target.
TOTAL OUTSTANDING DEPOSIT IN NATIONAL SAVINGS SCHEMES (IN MILLION PKR)
Special Savings Certs (Regd)
Regular Income Certificates
Defence Savings Certificates
2 91,410.03 2
Behbood Savings Certificates
Special Savings Accounts
Pensioners' Benefit Account
Total (Certificates Accounts)
National savings as percentage of GDP stood at 18.0 percent in 2006-07 fractionally higher than last year's level of 17.2 percent showing a growth of 4.65 percent. Domestic savings has raised from 15.3 percent of GDP to 16.1 percent of GDP represent an increase of 5.23 percent. In the current scenario, net foreign resource inflows are mainly coming from non-debt creating inflows.
STRUCTURE OF SAVINGS (AS PERCENT OF GDP)
P: Provisional Source: EA Wing Calculations