ISLAMABAD: In line with recent hike in the central bank’s policy rate rate, the Central Directorate of National Savings (CDNS) on Thursday increased profit rates on all national savings schemes by up to two per cent.

The new rates would be applicable to deposits and investments made on December 10. The State Bank of Pakistan (SBP) had increased its discount rate by 1.5pc to 8.75pc in November and 0.25pc in September.

The return on savings accounts and bonds are linked with the central bank’s policy rates and are normally kept slightly higher to ensure better returns to small savers without drastically affecting the government budget.

According to notifications issued here, the CDNS, working under the Ministry of Finance, increased the profit rate of Defence Savings Certificate (DSC) to 10.98pc from 9.37pc, showing an increase of 161 basis points (bps). It stood at 9.29pc in May this year.

Likewise, the returns on Behbood Savings Certifi­cates, Pensioners’ Benefit Account and Shuhada Family Welfare Account were jacked up to 12.96pc from 11.04pc, up 192bps.

The return on Regular Income Certificates was increased to 10.80pc of total investment compared to existing rate of 8.78pc, up 204pbs. The profit margin on Special Saving Certificates and Special Saving Accounts were also raised to 10.60pc from 8.20pc at present, showing an increase of 161bps.

Also, the return on savings account has been increased to 7.25pc from 5.5pc at present, up 175pbs.

The CDNS has dispatched revised rates sheets to all the regional offices with instructions that existing stock of blank special savings certificates, regular income certificates and defence saving certificates would now be used by affixing rubber stamps with Issue48, Issue45 and Issue44, respectively, along with revised rates before issuance.

Officials said the profit rates were revised owing to 150 basis point increase (from 7.25 pc to 8.5pc) in benchmark interest rates announced by the SBP on Nov 19.

The rates of national savings schemes are announced after every two months and are linked to cut-off yield of the long-term Pakistan Investment Bonds. As of the last auction a few days ago, the return on PIBs range between 9.4pc on three-year paper going up to 12.4pc on 30-year bond.

An official said the rates had been revised upwards due to the rising secondary market yields on long-term PIBs and Treasury bills in line with the increasing policy rate of the SBP.

Published in Dawn, December 10th, 2021