LAHORE (February 09 2010): The Directorate of National Savings (NSs) has generated an amount of Rs 3.6 billion till January 26, 2010 through subscription of newly launched National Savings Bonds to be traded at all the three stock exchanges in near future. The National Saving Organisation's (NSO) portfolio has been increased from Rs 1040 billion in November 2007 to Rs 1550 billion as compared to the State Bank's portfolio that has been declined from Rs 1400 billion in November 2007 to Rs 1100 billion.

This was disclosed by the Managing Director (MD) of the Directorate of National Savings (NS) Zafar M Shaikh while in his presentation before the Lahore Stock Exchange (LSE)'s members here on Monday. The NSO has 370 branches to take care of its six million customers across the country out of which 44 would be computerised this year, he added.

"A huge amount of Rs 1064 billion is still out of channel and we have to bring it into the system, which would help address the liquidity problem," he said. He added that liquidity problem will continue to exist as long as the money will remain out of system.

The NSO is working on introducing different products in this regard and the Shariah Compliance could be the next instrument to encourage general public for saving, he maintained. Zafar Shaikh said that it would be the first Bond to be listed at all the three stock exchanges of the country and meant to promote small investors. The rate of return would remain equal for all irrespective of quantum of investment, he said.

Our efforts are focused to develop secondary market in the country to help improve liquidity on one side and to encourage small savers on the other. The National Savings has achieved target plus revenue of Rs 110 billion in the fist six months mainly through small savers while Rs 241 billion was fixed as debt target this year, he added.

Responding to different quires with regard to National Saving Bonds, he said it would be for three to five and ten-year tenure. A return at 12.5 per cent per annum would be provided on three-year investment, 12.55 per cent per annum on five-year and 12.60 per cent per annum would be given on 10-year duration. Before the maturity, the bonds could be tradable at the stock exchanges while the biannually profit would either be deposited directly in the investors' bank account or on the given addresses, he maintained.

Answering to participants, he further said the Bond shall only be issued in book entry form in the Central Depository System (CDS) where withdrawal in physical form shall not be allowed. The Bonds may be pledged, as security in Pakistan while the profit on these bonds would be liable to tax under the Income Tax Ordinance 2001 and withholding tax, he said.

To another question, the Managing Director said that not a single country in the world defaulted on the domestic front. Same case is with Pakistan that would also never be defaulted and every penny invested in any scheme/bank is safe and secured, he added. Earlier, we have developed KIBOR, which now has become a benchmark and also helped Bangladesh in establishing DIBOR.

Copyright Business Recorder, 2010