Islamabad: The Directorate of National Savings (DNS) has proposed a reduction of 3 million in investment from the maximum limit of 5 million to discourage wealthy widows or senior citizens from investing huge amounts in the scheme.
According to a WealthPK’s report, Directorate has also proposed a reduction in the special subsidized rate from 2% to 1.5% and submitted the proposed draft to the Ministry of Finance in consultation with the State Bank of Pakistan.
A DNS official told WealthPk that Bahbood Savings Certificate (BSC) was a subsidized scheme catering to a special segment of the society comprising senior citizens, widows and pensioners. The maximum investment limit is Rs5 million whereas subsidized rates of maximum 2% above the prevailing rates are offered.
The official said the installation of Core Business Application (CBA) was in the process after which neither an ineligible investor could apply for these schemes nor could the maximum limit of investment be avoided. The minimum and maximum caps may be applied to the rates.
Data reveals that the BSC, which is a key financial tool of DNS, has a total of 1,289,836 investors with a portfolio of Rs1,001 billion (1 trillion), whereas the Pensioner Benefit Account had a total of 2,65,305 investors with a portfolio of Rs355 billion. According to documents, a reduction in the upper cap limit would have an impact on the gross inflow, which will be a decrease of approximately Rs20 billion.
A senior official of National Savings told WealthPk that the financial instruments, which may include Savings and Bahbood certificates, are responsible for generating deposits for financial institutions like the National Savings. Issuance of term-based certificates resulted in huge deposits in a span of time creating a strong base of funds. These funds are less prone to interest rate fluctuations.
In addition, these financial tools are the cheapest and the easiest source of raising deposits.
The official also unfolded the medium-term plan of next two to three years, comprising digital/scrip-less prize bonds and certificates, and offering of a Shariah-compliant product exclusively designed for women, while revision of features of BSC scheme is also on board.
In addition to the above, for discontinuation of Rs25,000 bearer prize bond, it is under consideration in the Finance Division that a registered prize bond of the same denomination may be offered to the general public for replacement. The matter has been taken up with the State Bank of Pakistan for consultation.
With a 10-year maturity period, the BSC was launched by the government on July 30, 2003. Initially, the certificate was exclusively meant for widows; however, it was decided later by the government to extend the facility to senior citizens aged 60 and above with effect from Jan. 1, 2004.
The scheme has now further been extended to the special persons – holding CNIC with a disability logo – or the special minors through guardians with effect from April 23, 2018. BSCs are available in the denominations of Rs5, 000, Rs10,000, Rs50,000, Rs100,000, Rs500,000, and Rs1,000,000.
The profit is paid on the monthly basis starting from the date of purchase of certificates. BSCs can only be purchased from the National Savings Centers by filling in SC-1 (Application Form). -INP
