Govt Bans Institutional Investment in National Savings

In order to redirect investments to other parts of the financial sector, the government has restricted institutional investments in national savings schemes (NSS).

Govt. (Finance Division) issued the notice in which it said that institutional investors can no longer invest in the National Saving Scheme (NSS) on the recommendation of State Bank of Pak. w.e.f. 1st July 2020.

The move aims to discourage financial institutions across the country from parking funds in the National Saving Schemes products and divert these investments towards other long-term instruments such as the Pakistan Investment Bonds and stock market etc.

“In the light of the decision of the committee constituted to finalize a plan for the elimination of institutional investors from NSS products and recommendation of State Bank of Pakistan, the competent authority has been pleased to direct that institutional investment in national savings schemes shall be discontinued from 1 July 2020,” the finance division said in a statement.

Central Directorate of National Savings (CDNS) has an investment portfolio of Rs. 4 trillion and out of that around Rs. 500 billion is from funds, such as Employees Old-Age Benefits Institution and non-profit organizations.

The central bank slashed its key policy rate by cumulative 625 basis points to 7 percent since March.

The test data released by the CDNS on June 25 showed it achie­ved the net collection target of Rs. 375 billion in the ongoing fiscal year.

The directorate had set the an­­nu­al collection target of Rs. 352 billion for the fiscal year 2019-20 as compared to Rs. 350 billion in the correspon­ding period last year to enhance and promote saving culture.

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