Savings mobilisation by the National Savings Schemes (NSS) in the first 10 months of 2014-15 was Rs277.3 billion, which is 63.6% higher than the amount of savings mobilised in the corresponding period of 2013-14.

As per latest data released by the State Bank of Pakistan (SBP), savings mobilised under the NSS in April amounted to only Rs8.3 billion, which is almost 62% less than the corresponding figure for the same month of last fiscal year.

The latest cut of 1% – or 100 basis points – in the benchmark interest rate by the SBP has further squeezed NSS returns that have been declining consistently since October 2014. NSS returns are now back to the levels last witnessed at the end of 2004-05.

For example, the profit rate on Defence Savings Certificates decreased from 12.75% in October 2014 to 8.68% June 1 onwards as a result of continuous monetary easing by the SBP. Similarly, the return on Regular Income Certificates declined from 12.3% in October 2014 to 7.6% with the start of the current month.

The substantial drop in savings mobilisation recorded in April appears to be a direct result of the SBP’s monetary easing, as the benchmark interest rate has come down three percentage points to 7% since October 2014.

The largest jump in NSS mobilisation in the first 10 months of 2014-15 was recorded in November when NSS received over Rs90 billion. It was the same month when the SBP began bringing down its key interest rate after keeping it flat at 10% for over a year.

The government has linked profit rates on major NSS with the yield on Pakistan Investment Bonds (PIBs).

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