KARACHI: Small investors now face additional difficulties after the government drastically cut savings account yields by as much as 360 basis points.
With only minor decreases for seniors, the Shuhada and Bahbood schemes for widows, and all other groups, the profit rates for National Savings Schemes (NSS) have been updated.
Launched in 1966 to draw in investments, the NSS enjoyed high participation at first, but when corporate entities started using these schemes to generate risk-free returns, its attraction changed. The total NSS investment volumes significantly decreased once corporate investments were outlawed in July 2020 to safeguard small investors.
The largest reduction is in Special Savings Certificates (SSC), where returns have decreased by 360 basis points, from 15.20 percent to 11.60 percent.
Additionally, Special Savings Accounts (SSA) had a 220 basis point decline in yields, currently giving 13 percent instead of 15.20 percent. Returns on Regular Income Certificates (RIC) were reduced by a modest 60 basis points, to 12.12 percent.
Profits on the Sarwa Islamic Savings Account (SISA) and Sarwa Islamic Term Account each saw a 309 basis point decline, from 14.25 percent to 11.16 percent. This also affected Islamic accounts.
In the meantime, returns on welfare-focused accounts, including the Bahbood Savings Certificates, Pensioners’ Benefit Account, and Shuhadas Family Welfare Account, witnessed slight decreases of 24 basis points apiece, now standing at 13.92 percent.
Because of the State Bank’s recent interest rate cuts, the financial market widely expected these cuts. The State Bank has reduced the interest rate by 450 basis points to 17.5 percent since June 2024, and further reduction is anticipated in the upcoming monetary policy decision on November 4.
Additionally, the new NSS profit rates will go into effect on November 4. This year, NSS invested a total of Rs18.4 billion in July and Rs5.82 billion in August.
