Research Analyst
June 6 - 12, 2011

National Savings Organization is the biggest nonbank borrowing institution for the government, with over six million account holders investing more than Rs1,500 billion. Special Savings Certificates (SSC) and Special Savings Accounts remained the attractive instruments for the investors despite the higher interest rate offered by Bahbood Saving Certificates (BSC) and Pensioner's Benefit Account.


Jun-08 1,094 2.1 28.5
Sep-08 1,114 1.9 29.5
Dec-08 1,143 2.5 30.1
Mar-09 1,267 10.9 32.7
Jun-0 91,361 7.4 33.0
Sep-09 1,424 4.6 34.2
Dec-09 1,476 3.6 34.1
Mar-10 1,530 3.7 34.6
Jun-10 1,586 3.6 34.0
Sep-10 1,628 2.7 34.5

Mobilization through prize bonds saw a significant improvement. This was mainly due to the decision of the government to increase the amount of prizes on different denominations in Feb 2009. The interest payments on the matured stock of DSCs still constitute a major share in the total interest payments on unfunded debt.

Within the permanent debt, a major development was the introduction of first ever tradable national saving bond (NSB) in Jan 2010. The government was able to attract Rs3.7 billion through NSB during Jan 2010.

The NSBs are authorized by the ministry of finance and backed by a sovereign guarantee of the government of Pakistan. The NSBs mark a paradigm shift of government borrowings from the banking sector to the nonbanking sector the latter being relatively less inflationary. The NSB bonds are relatively of a small size of Rs3.6 billion at the start, but they would extend the outreach of the stock exchanges. National Savings Organization already manages over Rs1 trillion of public money in various savings schemes. The current year target for fresh investment is set at Rs240 billion. Debt servicing cost being incurred against matured stock of DSCs forms more than 50 per cent of the total debt servicing cost on the unfunded debt. However, it is pertinent to note here that the outflow in the form of interest payments on DSC is declining overtime. Also, the debt servicing cost of BSC and SSC increased significantly in the period under discussion, as the major amount raised against these certificates was issued at significantly higher interest rates during FY09.

The NSS during the first ten months of 2009-10 attracted Rs166 billion compared to Rs267 billion for the whole of last year. Nonbank finance, especially from NSS, made it possible to arrest the borrowings from the banking system in FY10.

At present, this organization has a total sanctioned strength of 3377 employees, 12 regional directorates and 367 national savings centers spread throughout the country.


During the First World War, the British government introduced several schemes for collection of funds to meet the expenditures. It was in this context that the post office cash certificates and, during the Second World War post office defence savings certificates were floated. The need to set up a separate agency was felt and a national savings bureau was established in 1943-44 as an attached department of the MoF 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. Gradually, savings organization was established in almost all the provinces of the subcontinent with the objective of popularizing the savings schemes among the masses as well as to supervise, guide and control the working of authorized agents under their jurisdiction.

These authorized agents were in those days the only agency for securing investment in terms of savings certificates from the general public.

In a nutshell, the central agency viz. National Savings Bureau, Simla, was mainly concerned with the policy and planning matters of the savings schemes whereas the responsibility of execution of various savings schemes were delegated to the provincial authorities. At the time of independence, there was no time for any sort of innovations in the field of administration. Thus, 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, but this bureau had its own peculiarities.

In 1953, the Pakistan Savings Control Bureau was re-named as central directorate of national savings and it carried out the functions on the lines of National Savings Bureau Simla but as a part and parcel of the finance division, central directorate of national savings was only responsible for publicity, and the operative agents were the provincial governments as well as Pakistan post offices. However, the entire expenditure in this regard was borne by the central government. In view of difficulties, the central directorate of national savings was given the status of an attached department in Sep, 1960, and was made responsible for all policy matters and execution of various national savings schemes.

Till Dec, 1971, the national savings organization functioned as a publicity organization and its activities were merely promotional in nature. But, in early 1972, the scope of its activities was enlarged as the central directorate started selling II-Rupee Prize Bonds, and subsequently engaged in the operations of other savings schemes.