Effective from 24th April, Central Directorate on National Savings (CDNS) announced reduction in profit rates on National Savings Certificates. The profit rates on all savings certificates including defense certificate, pension certificates, savings account and special savings will all be adjusted. The decision is made in light of the recent policy rate cut of 200 basis points on 16th April and earlier rate cut of 75 basis points on 17th March.
In an effort to provide relief to small and medium industries as well as investors in Pakistan during the coronavirus outbreak, State Bank of Pakistan reduced policy rate twice in a month by 425 basis points. The cut in policy rate is part of Prime Minister Imran Khan’s agenda to provide economic relief package to people of Pakistan. The reduction in interest rate will ensure easy credit lending by commercial banks to borrowers which will cover up for losses incurred under the lockdown in country.
New Profit Rates for National Savings Schemes
To adjust the interest rates for all commercial and government financial institutions, CDNS has today announced reduction in profit rates for national savings schemes. The profit rate on Defence Certificates is cut by 1.86% to 8.54%. The profit rate on Behbood Certificates and Pension Certificates are cut by 1.92%. The new profit rate for Behbood and Pension Certificate will be 10.32%. The profit rate on Savings Account is cut by 1.6% bringing new rate to 7%. The profit rate on Special Savings Certificate will be cut by 3% bringing profit rate to 8%. Finally, the profit rate on Regular Income Certificate is cut by 2.28% to 8.28%.
The new profit rates are applicable from 24th April and are adjusted in line with State Bank’s new policy rate of 9%. The analysts view overall benefits of policy rate cut to be above the adjustments made in profit rates.