December 6, 2021 (MLN): Net savings mobilized under National Savings Schemes (NSS) remained negative as investors pulled out Rs79 billion on a net basis during Jul-Oct FY22, against an inflow of Rs24.84bn in the same period last year, Centra bank data showed on Monday.
To recall, during FY21, the NSS witnessed a huge outflow of Rs317.25billion, compared to the inflows of Rs370.9billion recorded in FY20, which was the second-highest annual mobilization achieved in the 17-year period.
The major reason behind the continuous outflow of investments under NSS was the restriction imposed on financial institutions to invest in NSS. Moreover, registration requirements for prize bonds of higher denominations and strict implementation of anti-money laundering laws and know-your-customer (KYC) conditions have also had a negative impact on fund mobilization.
According to SBP’s data, the outflow of investments from NSS in October alone amounted to Rs6.84billion against the influx of Rs12.24billion in the same month the previous year and the withdrawal of Rs21billion in Sep 2021.
During 4MFY22, most of the outflows were recorded in prize bonds (Rs64.36billion against an inflow of Rs25.54billion in 4MFY21) followed by special saving certificates (Rs17.57billion) and defense saving certificates (Rs2.57billion). While the regular income certificates were the only major source of inflows as they fetched Rs6.5billion investments during the period mentioned above.
In the month of October, major outflows were witnessed from prize bonds and defense savings certificates with a drawdown amounting to Rs5.78bn and Rs456million, respectively. While special saving certificates and regular income certificates attracted Rs386 million and Rs1.07bn during the month.
Following the increase in policy rate, the government is likely to increase profit rates on the NSS in the range of 1-1.75%, as per the rate revision summary submitted by the Ministry of Finance which is yet to be approved by the government.
At present, the profit rate on behbood savings certificates and pensioners benefit account is 11.04% while, the defense saving certificate, regular income certificate, and special certificates are offering 9.37%, 8.76%, and 8.20%, respectively.
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