National Savings Increases Profit Rates

The government has increased the profit rate on several national savings certificates and schemes by up to 240 basis points.

The government has revised the profit rate upwards to absorb the benefit of a boost in its income from Pakistan Investment Bonds (PIBs).

The rate of return on Regular Income Certificates (RICs) has gone up by 204 basis points to 10.8 percent. The Behbood Savings Certificates’ (BSC) rate of interest went up by 192 basis points to 12.96 percent, and the profit rate on Defense Saving Certificates (DSC) has been increased by 161 basis points to 10.98 percent by the directorate.

Certificate	Current	Previous	Change (BPS)	Spread* (BPS)
Defense Saving Certificates (DSC)	11.12%	9.37%	175	237
Bahbood Savings Certificates (BSC)	12.96%	11.04%	192	421
Regular Income Certificates (RIC)	10.80%	8.76%	204	205
Special Savings Certificates (SSC)	10.40%	8.20%	220	165

The figures published by the central bank on Monday showed that the net investment in the total saving certificates and prize bonds remained negative at Rs. 78.88 billion in the first four months (July-October) of the current fiscal year 2021-22.

According to Arif Habib Limited, the yields on the benchmark 10-year PIBs have increased by around 200 basis points over the past six to eight weeks.

Institutional investors are continuing to pull out of saving plans and prize bonds at maturity as the government has prohibited them from investing in the schemes. Furthermore, because the government has ceased prize bonds denominated under Rs. 40,000, Rs. 25,000, and Rs. 15,000, individuals have no other choice but to redeem them.

Although institutional investors are no longer permitted to invest in saving schemes, an increase in the rate of return on saving plans may not have a significant impact on investment at the Pakistan Stock Exchange (PSX), according to an AHL analyst. Conversely, individual investors may choose to shift some of their assets from the stock market to the fixed-return savings apparatus.