National Savings 222

NATIONAL SAVINGS
(COMPARISON OF BANKS AND

SAVINGS CENTERS)
Ayesha Farooq
8/29/2013
Submitted to:
Sir Fida Hussain Bukhari
Submitted by:
Ayeshe Farooq (M09BBA020)
BBA (Hons.)
(Banking and Finance)
Topic:
NATIONAL SAVINGS (COMPARISON
OF BANKS AND SAVINGS CENTERS)
National Savings (Comparative analysis of banks and savings centers)
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ACKNOLEDGEMENT
I am grateful to my supervisor sir Fida Hussain Bukhari for his attention and
guidance throughout the project work. Without his guidance and suggestions, it
would have been very difficult for me to complete this project.
Furthermore, I would like to thank my family and friends for all the love, support
and understanding they gave me during the time of writing this project.
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Executive summary
INTRODUCTION
National savings means Total saving by all sectors of the economy: personal
saving, business saving (corporate after-tax profits not paid as dividends), and
government saving (the budget surplus or deficit). National saving represents all
income not consumed, publicly or privately, during a given period. In my research
I will compare the contribution of the banks and national savings centers towards
national savings .whether banks contributed more in national savings or savings
centers. I will do research with in the time series of years 2003 to 2013.
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I will do the past data analysis.
SIGNIFICANCE OF THE STUDY:

Source of national savings is private savings less budget deficit. And use of
national savings is equal to domestic investment less investment finance by
borrowings from abroad.in this context high national saving will raise future living
standards whether it finances investment directly or reduces international
borrowing. Because not or less national savings will reduce the domestic
investment and ultimately burden of paying the interest and dividend on foreign
borrowings. It is very important to find the ways to increase the national savings
.and savings is mobilized by financial institutions like banks savings centers, DFIs
and NBFC. By considering its importance we are going to analysis the roll of banks
and savings centers towards national savings.
OBJECTIVE:
The purpose of this study is to examine the roll of banks and savings centers in
national savings.
METHODOLOGY:
In this research topic quantitative technique is used. Because I have gathered the
data form financial statements of different banks and national saving centers and
reports of state bank of Pakistan. I study state bank of Pakistan reports, reports of
IMF, Pakistan economic surveys, central directorate of national savings reports.
All data is taken from internet.
NATIONAL SAVING:
For a country, saving is defined in a similar manner: by subtracting from a
countrys economy what is consumed. We subtract govt. purchases of goods and
services in addition to consumer purchases(S=Y-C-G).The major component of
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national saving is private saving (the sum of all savings by individuals in economy).
Some people save a lot, some do not save al all, and some are dissaving-that is
they have negative saving. For example: when people retire they usually consume
a lot more than their income they are dissaving, when people are middle-aged,
their income is usually greater than their consumption they are saving. Most
young people either save very little or, if they are able to borrow, they dis-save.
We define private saving using the symbol T for taxes as
Private saving=Y-C-T. (Weerapana-page 528-2008)
The Components of Aggregate Saving

For this purpose it is helpful to introduce the concept of the Gross Domestic
Product (or GDP), and some elementary associated national accounting
relationships. The GDP is simply a measure of the country's aggregate rate of
production of final goods and services over a specified period. (It is from changes
in GDP that we calculate the national rate of economic growth that is so often
cited by politicians). The millions of commodities included in the GDP may be
classified in various ways. A widely used system of classification distinguishes
between consumption goods and services, C (which includes such things as food,
clothing, cars, refrigerators and haircuts purchased by households); private sector
investment goods, I (which includes such things as plant and equipment and
inventories purchased by the business sector, as well as residential housing
purchased by households); goods and services purchased by the government
sector, G; and net exports, NX (the difference between exports and imports of
goods and services). We may consider net exports a proxy for the balance of
current account in the balance of payments. On this basis, then, we can
represent the (real) GDP for any period as a sum of these components:
(production =income)
1. GDP = C + I + G + NX
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The process of production generates not only a flow of outputs of goods, but also
a flow of incomes to those participating in the process. Since, in general, every
dollar of production generates a dollar of income, it follows that the real GDP of a
country reflects a corresponding flow of aggregate real income in that country.
Thus aggregate output and income are essentially equivalent measures of
aggregate economic activity. Leaving aside some refinement of detail associated
with international transactions, all of the income generated in any period is
attributable to the household sector, since the owners of firms (whose income
takes the form of profits) are of course themselves also part of that sector. The
incomes received by households may be categorized into the part that they spend
on consumption goods, the part that they save, and the part that they are
required to pay in taxes. Thus aggregate income may be represented as a sum of
consumption (C), saving (S) and taxation (T). Bearing in mind that we can
represent aggregate income by GDP, we can summaries the components of
income as:
2. GDP = C + S + T
Now we may combine our definitions of aggregate output and aggregate income
in equations (1) and (2), to get:
3. C + I + G + NX = C + S + T
This may be rearranged as investment.
4. I = S - (G - T) NX
For it defines, in the three terms on the right hand side, the sources of saving
from which aggregate investment can be financed. The first is domestic private
sector saving, S (that is, saving by households and business enterprises). The
second is public sector saving, represented by the government budget deficit, or
the difference between government expenditure and tax revenue, (G-T). The third
source of saving is the foreign sector. By the logic of our international economic
relationships any net borrowing from the rest of the world implies a
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corresponding current account deficit. Thus our utilization of foreign saving is

represented here by net exports, NX. It is important to note that, in principle, any
of these saving flows may be positive, zero, or negative.
It is clear now that some of the confusion about the relationship between saving
and investment derives from the fact that there are several kinds of saving to be
taken into account. Total saving is made up of a domestic component and an
international component, either of which may be positive, zero or negative.
Domestic, or national, saving comprises the saving of the private sector, S, and
the saving of the government sector (G-T).
Gross National Savings (% of GDP)

Statistics for Pakistan:
Gross National Savings (% of GDP) for Pakistan in year 2013 is 12.249 %. The
estimates of national saving are built up from national accounts data on gross
domestic investment and from balance of payments-based data on net foreign
investment. This makes Pakistan No. 136 in world rankings according to Gross
National Savings (% of GDP) in year 2013. The world's average Gross National
Savings (% of GDP) value is 18.95 %; Pakistan is 6.70 less than the average. In the
previous year, 2012, Gross National Savings (% of GDP) for Pakistan was 10.52 %.
In the following or forecasted year, 2014, Gross National Savings (% of GDP) for
Pakistan will be 11.82 %, which is 3.47% less than the 2013 figure.
Year
2012
2013
2014
Gross national savings

10.52%
12.249%
11.82%
Monetary aggregates in Pakistan:

In Pakistan, three different types of monetary aggregates are in use to measure
the stock of money as well as for policy formulation. These include the narrow
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measures M0, M1 and a broader aggregate M2. The M2 is composed of currency

in circulation, other deposits with SBP, demand deposits, time deposits and
Resident Foreign Currency Deposits (RFCDs) of the scheduled banks. A review of
financial assets indicates that a wide range of financial instruments such as
liabilities of non-bank financial institutions, NSS instruments etc., having similar
characteristics like time deposits are potential candidates to be considered for
inclusion in monetary aggregates. Moreover, financial landscape of the country
has undergone significant changes over the past one and a half decade. A number
of new financial instruments have emerged that calls for both to reconsider the
composition of the existing aggregates and define higher order monetary
aggregates.
CENTRAL DIRECTORATE OF
NATIONAL SAVINGS (CDNS):
In Pakistan, scheduled banks, DFIs, some NBFCs and central directorate of
national savings (CDNS) are the various types of financial institutions which
mobilize savings from the economy but with altogether different objectives.
While banks and NBFIs serve as financial intermediaries that accept deposits and
channelize them to lending activities, CDNS promotes domestic savings by
providing access to different types of savings instruments, with the objective of
providing non-bank financing for the governments budget deficit. These
institutions operate as direct competitors in mobilizing financial savings.
BRIEF HISTORY:
The history of the national savings organization in Pakistan dates back to 1873
when the government savings banks act, 1873 was promulgated. Since the
inception of the national savings organization, this platform has largely been
used by the government to mobilize funds to finance the budget deficit. During
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the First World War, the British government used this channel to raise funds to
meet war related expenditures. Since acquiring independence in 1947, this
organization remained operational in Pakistan in various forms. In august 1960,
the CDNS was given the status of an attached department of the ministry of
finance and made responsible for all policy matters and execution of various
national savings schemes (NSS). The present structure of CDNS was set up in early
1972 under the ministry of finance. So far, CDNS has not only remained successful
in promoting financial savings in the economy but has also generated requisite
funds for the government to finance the budgetary deficit. National savings
schemes (NSS) offered by CDNS are sold through a network of 367 national
savings centers all over the country, controlled by 12 regional directorate of
national savings(RDNS).
NSS FEATURES AND MOBILIZATION TRENDS:

CDNS offers various non-tradable, long-term bonds, savings certificates and
schemes which meet the savings and investment needs of various eligible
investors, particularly the fixed income group. These savings instruments have
different maturity profile, ranging from 3 years to 10 years, with varying interest
rates. The government also launched the first ever listed, scrip less and tradable
national savings bond (NSB) on January 11, 2010 with maturities of 3, 5 and 10
years.
PROFILE OF SELECTED NSS INSTRUMENTS:

Features
Launched in
Maturity
period
Minimum
holding
period
Early
encashment
DSCs
1966
10 years
SSCs
1990
3 years
RICs
1993
5 years
BSCs
2003
10 years
PBA
2003
10 years
1 month
1 month
1 month
1 month
1 month
No profit
payable
is No profit
if payable
is 0.5% to 2 0.25 % to 0.25 % to

if % of face 1 % of 1 % of
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penalty
encashment
before
completion
each year
encashment
value
before
of completion of
each period of
six months
Bi-annually
Monthly
face value
Profit
Bullet bonds
Monthly
payments
Zakat
Compulsory
compulsory
exempted exempted
Withholdin @10%*
@10%*
@10%
exempted
g tax
Minimum
Rs.500
Rs.500
Rs.50,000 Rs.5,000
investment
amount
Maximum
No limit
No limit
No limit
Rs.3,000,0
investment
00
limit
Institutiona Allowed **
Allowed**
Allowed** Not
l
allowed^
investment
*Withholding tax is exempted if total investment does not exceed Rs
150, 000
face value
Monthly
exempted
exempted
Rs.10,000
Rs.3,000,0
00
Not
allowed #
** Excluding banks and insurance companies

^only widows and senior citizen aged 60 years and above are allowed to invest in this
instrument
#only pensioners of federal government, provincial government, government of Azad
Jammu and Kashmir, armed forces, semi-government and autonomous bodies are
allowed to invest
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As mentioned above, the most pertinent objective of establishing the central

directorate of national saving (CDNS) was to mobilize private savings to finance
the budget deficit. However, the highly attractive rates of return on these
schemes made them a popular avenue of investment not only for the general
public but also for corporate investors. The popularity of NSS instrument rose to
the extent that every year the government received a net inflow of private funds
from NSS, and serviced the returns, in addition to repaying the principal, from
gross receipts. As a result the government did not need to separately allocate
funds in the budget to service these schemes or to repay the principal when
required. Subsequent to FY04 however, a change in this trend was observed,
especially during FY04, when for once total repayments could not be paid through
the gross sale receipts of NSS instruments. One of the main reasons for this was
the ban on institutional investments in NSS instruments in March 2000, which
substantially reduced their gross sales. Another major contributory reason was
the linking of the NSS rates with the rates on Pakistan investment bonds (PIBs), a
market-based instrument in FY00.consequently, the sharp decline in market
interest rates during fy03 and fy04 impacted the rates of return on schemes as
well, resulting in a diversion of private savings towards other investment options.
In addition, banks were also prohibited from selling NSS instruments from June
15, 2003 in order to discourage arbitrage opportunities due to the wide interest
rate differential between NSS rates and lending rates on loan secured by these
instruments. As a result, the share of NSS in total domestic debt, which had been
raising untilFY03, started to decline. However the introduction of pensioners
benefit accounts (PBAs) and behbood saving certificates (BSCs) during FY03 and
FY04 respectively, with returns significantly higher than other NSS instruments,
attracted many customers from among the people eligible to invest in these
schemes. In a rising interest rate environment, as seen from FY05 onwards with a
brief respite in between, the rates of return on NSS instruments have also
increased, giving rise to positive inflows. The removal of the ban on institutional
investment (expect banks and insurance companies) also helped mobilize savings
from October 2006 onwards.
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SHARES OF VARIOUS NSS INSTRUMENTS IN OUTSTANDING NSS

STOCK:
The shares of each type of instrument in total outstanding stock are shone below.
Items
FY06
1. certificates 73.6
Defense
33.6
saving
certificates
Special
15.9
saving
certificates
Regular
7.9
income
certificates
Behbood
16.2
saving
certificates
Others
0.1
2. accounts
13.7
3. others
12.7
Total (1+2+3) 100
NSS
stock 880
(million
rupees)
Source:S&DWH
FY07
72.1
FY08
71.1
27.9
FY09
74.4
20.2
FY10
74.1
15.4
15.6
15.7
22.7
24.1
5.5
5.0
7.2
9.3
20.0
22.4
24.2
25.2
0.1
16.2
11.8
100
940
0.1
18.1
10.7
100
1,020
0.0
17.2
8.4
100
1,271
0.0
18.3
7.6
100
1,456
30.7
Above the table shows that NSS rates of return, indicating that CDNS invariably
offers higher rates of returns on various NSS schemes as compared to the
weighted average rates on bank deposits. In December FY00, with the objective of
eliminating market distortion and moving to a market mechanism for the
determination of rates, the rates of returns on NSS instruments were linked with
the cut-off rates on Pakistan investment bonds. Following the declining trend in
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PIB rates from FY02-FY04,rates of return on NSS instruments started declining and
reached 7.1 %(average)in FY05, from 12.4% in FY00. From end FY08 onwards,
there have been several upwards revisions in NSS rates in line with the changes in
rates on PIBs, driven by monetary tightening by the central bank. Consequently,
NSS recorded historical net inflows of Rs. 250.1 billion in FY09.however, a fall in
PIB rates in the brief period of monetary easing in 2009, led to a reduction in NSS
rates by 283-300 bps. Consequently during FY10, net flows of Rs.185.7 into NSS
were below the targeted amount of Rs.231 billion. Subsequently to the reversal in
the monetary stance from FY11 onwards, the rate of profit on these schemes
were also enhanced. Although NSS instruments do not provide inflation adjusted
returns. Nevertheless, their relatively higher rates makes them attractive
investment instrument. Given growing inflationary pressure in FY10, the real rate
of return on both NSS instruments and bank deposits are flying around the
negative zone. Notably ,NSS instruments are protected to market fluctuations in
interest rates due to their non-tradable nature .Another prominent feature of
these instrument is their availability on tap, and the embedded put option,
which enables the investor to encash his investment and reinvest at a higher rate
each time there is an upward revision in the rates of returns. The early
encashment facility without any cash penalty reinforces this particular behavior.
These various features of NSS instruments tend to create distortions in the
financial system.
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RATES OF PROFITS ON NATIONAL SAVING SCHEMES:

Schemes
200 200
7
8
1. Saving accounts
a. With check facility
b. Without
check
facility
2. khas deposit accounts
or certificates 3 years
(rollover)
a. Three
years(compound
rate)
3.Mahana
amdani
accounts
a. Compound rate on
maturity
4.Defence
saving
certificates
a. 10
years
(compound rates)
5.national
deposit
certificates/accounts
a. 1 year (rollover)
6.special
saving 12.
certificates/accounts
8%
a. Registered
(last
period of complete
six month)
200
9
1
July
2010
1
Oct.
8
8
8.50 8.50
2011 2012
2013
1
12 Oct. 1Jan
Oct.
6.85
6.85
6.65
6.65
13.4 13.42 13.4

2
2
13.42
13.42
10.4 10.41 10.4

1
1
10.41
10.41
12.1 12.60 12.6

5
8
11.04
10.84
13
13
13
12.80 13
10.50
10.30
14
14
14
15.2
%
12
14
13
8
8.50
13
14
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b. Bearer (last 2
period of complete
six month)
7.regular
income 13. 15% 12
12.36
certificates
3%
8. pensioners benefit 15 16.8 14.1 14.64
accounts
%
%
6
9.
behbood
saving 15 16.8 14.1 14.64
certificate
%
%
6
Source: central directorate of national savings.
TROUBLE
CENTERS:
AT
12.6
0
14.4
0
14.4
0
10.56
10.37
12.96
12.72
12.96
12.72
NATIONAL
SAVINGS
By Afshan Subohi
September 29th, 2008
For commoners, the government schemes have proved to be an attractive avenue
of investment because of steady returns and minimal risk. For government, it has
been a most dependable, comparatively cheaper mode of domestic borrowing
and the least damaging. Leaning on the central bank to bridge the government
resource gap create more imperfections. When the government needs to borrow
and the citizens are inclined to invest in its savings schemes, the institution
handling the business should have been a model financial organization. The
Central Directorate of National Savings is far from being ideal even if the issue of
rates being offered is set aside. It (CDNS) is among the most neglected
organizations working under the all-powerful and seemingly most mixed up
ministry of finance, said a retired CDNS employee. Last year we surpassed the
initial target of Rs43 billion that was later revised to Rs80 billion. The CDNS
achieved net collection of Rs87 billion during the year. This year the government
increased the target sharply to Rs150 billion. We are trying to meet the target by
introducing new short- term schemes despite multiple organisational issues,
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Zafar Sheikh, Director General CDNS told Dawn from Islamabad. Some senior
members of the organization and staff of branches visited in Karachi gave out a
long list of pending problems faced by the CDNS staff. Most staffers are on the
edge. Had there been jobs in the market each one of us would have left long time
back. We are made to work like donkeys under immense stress. There are at least
ten people prodding while we make entries in giant registers and calculate profits
for clients, said a disgruntled officer at a branch. The average strength of staff at
one branch is seven who handle up to 400 cases in busy branches. Many staffers
of CDNS blamed their officers for their dilemma. When hundreds of millions of
rupees are handled manually there is possibility of grave mistakes. Currently
CDNS is not exposed to external audits. It is humanly impossible to manage the
current size of account holders without automation, said a regional head who
wished not to be named. In all there are twelve regions and several dozen
branches all over the country. The staff strength of the organization has been
frozen for the last 25 years. Over this period the total funds handled multiplied
many times from Rs25-30 billion back in 1984; today total stocks of CDNS stand at
1.157 trillion. Not only this, there are various new schemes with periodical returns
that has further increased the workload on our staff, Afzal Tahir Bajwa, Director
Schemes told this scribe from Islamabad. A half-hearted attempt was made a few
years back and computer stations were installed in some branches in the name of
gradually introducing automation. The system failed. It was a non-starter from
the word go a staffer at a branch said. The seniors in Islamabad and Karachi
believe that nothing less than creation of a full-fledged IT department with a
capacity to develop suitable software should even be attempted. Dr Zafar said
that some headway has been made in this regard and a director IT has been
recruited to start with. The problems at the CDNS cannot be resolved by the
ministry of finance. There is a need for drastic restructuring and creation of a selfsustaining autonomous CDNS, the same suggestion was repeated at almost all
tiers of the organization. In this regard, the ground work was being done but the
summary was shot down all three times by what many believe officers of the
ministry of finance in collusion with all powerful bankers lobby who see the
institution as a challenging competitor. They are control freaks. Even when it is
already beyond their control they do not let it go. As for bankers, they like
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working in a tilted market loaded against depositors. More than interest it is their
psyche, commented an officer of Planning Commission reached for comment.
CONCLUSION:
While NSS ply an important role in mobilizing financial savings in the economy,
the outstanding stock of NSS instruments along with the unique characteristics of
these schemes create distortion in the financial sector. It is suggested that CDNS
is restructured in such a manner that it can continue to play its vital role in
mobilizing financial savings in the economy without creating significant
distortions in financial sector. To meet this objective , NSS instruments need to be
integrated into mainstream capital market by making them tradable(as suggested
by the SECP in its report ,and by withdrawing the implicit put option, which is a
potential source of liquidity problems for the government . it is also important to
upgrade CDNS infrastructure by utilizing IT services. Giving the huge size of
investment in NSS, a restructured and well- equipped CDNS can be strategically
used to promote outreach of financial services to remote areas.
CONTRIBUTION OF BANKS
IN NATIONAL SAVINGS:
BANKING SECTOR OF PAKISTAN:
Economic growth of a country improves because of good financial institutions.
Financial institutions available in Pakistan are; commercial banks, specialized
banks, national savings schemes, insurance companies, development finance
institutions, investment banks, stock exchanges, corporate brokerage houses,
leasing companies, discount houses, microfinance institutions and Islamic banks.
They offer several products and services. In 1971, developing commercial banks in
the private sector and creating development institutions was major focus of
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Government. The private sector development closed during the period 19711990, Government policy of nationalization. During this period, the banking sector
came under the Governments control. The current position of Pakistans financial
sector is the result of several policy shifts and developments. Like many other
developing countries, Pakistan also undertook the process of financial
restructuring through reforms in early 1990s to establish a more market-based
system of financial intermediation and Government financing, conduct the
monetary policy more efficiently through greater reliance on indirect instruments
and increase the contribution to the rapid development of the stock markets.
During the last few years, financial markets and institutions in Pakistan have
witnessed significant changes. Since 2000, more than 40 transactions of mergers
and acquisitions have been taken place within banks and between banks and nonbank finance companies. Also many banks/development financial institutions
have expanded their activities into the areas where the banks previously were
either not allowed or not interested. These include insurance, asset management,
brokerage, leasing and other non-banking finance services essentially through
separate entities. Along with financial services, various groups that control
different banks have also stakes in non-financial/real sector of economy. In the
World Economic Forum's Financial Development Report 2010, Pakistan has
been ranked 54out of 57 countries. State Bank of Pakistan (the central bank of the
country) is the sole supervisory and regulatory authority of Commercial Banks,
Islamic Commercial Bank, Development Financial Institutions (DFIs), Micro
Finance Banks and foreign exchange companies in Pakistan. The remaining
financial institutions are monitored by other authorities, such as the Securities
and Exchange Commission. Unpredicted floods and rains in the country worsened
the effects of an already delicate condition of banking sector as the nonperforming loans (NPLs) of the banking system grew at a faster rate during 2010.
The asset base of the system also contracted over the year. The macroenvironment is already questionable for the last two years or so. A host of factors
i.e. slackened economic activities; power shortages, security concerns, and higher
inflation have squeezed profit margins as well as the repayment capacity of
borrowers. Moreover, the fiscal situation also deteriorated and the public sector
borrowed heavily from banks for budgetary support, financing needs of Public
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Sector Enterprises (PSEs) and commodity operations. 4.1 percent was the GDP
growth for 2009. However, the increasing inflation is affecting the current
economic situation. The economic condition has further worsened by
unpredictable floods and seasonal rains. GDP growth for 2010 and 2011 is
expected to remain 2 to 3 percent against the target of 4.5 percent and inflation is
expected to remain 13.5 to 14.5 percent due to these problems. However,
internationally IMF in its recent World Economic Outlook of Oct-2010 has
highlighted an increasing growth than projected growth during first half of 2010.
Other than this the global activity will expand by 4.8 percent during 2010 (up from
4.6 percent forecast of Jul-2010), it shows that the economy is facing a number of
unresolved challenges and downside risks continue to predominate. After the
independence Pakistani banking sector have face drastic changes. It faced several
shortages of resources and uncertainty due political and economic instability.
Lack of trained human resource and professionals resulted into poor quality of
products and services. State Bank of Pakistan was formed as a central bank on
July 1, 1948 to control the financial sector. Subsequent amendments were made
to extend the control and functions of SBP through State Bank of Pakistan Act
1956. SBP introduced private sector to establish banks and financial institutions in
the country. During the period of 1050s and 1960s unhealthy and unlawful
competition resulted due to bribe and corruption. In 1974, all the existing banks
were nationalized by the Government. Their performance worsened due to
government protection to employees, resulting into the provision of inferior
products and poor services. It also discouraged the private investors and foreign
financial institutions. The bad condition nationalized banks led to privatization of
banking sector in early 1990s. Today, in the growth of the countrys economy
banking sector plays an important role. According to the State Bank of Pakistan
Act, the banking system of Pakistan is a two-tier system including the State Bank
of Pakistan (SBP), commercial banks, specialized banks, Development Finance
Institutions (DFIs), Microfinance banks and Islamic banks. As of June 2010, the
banking sector comprised 36 commercial banks (including 25 local private banks,
4 public sector commercial banks and 7 foreign banks) and 4 specialized banks
with a total number of 9,087 branches throughout the country. Among the banks,
there are 6 fully fledged Islamic banks as at end of June 2010.
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Pakistani banks provide cash services to individuals and companies, including

correspondent-banking. Banks also offer domestic and cross-border remittance
services to the population. Also, they provide depository services. Sector reforms
have improved the financial landscape of the country, which was initiated in the
early 1990s - into an efficient, sound and strong banking system. The reforms
have resulted in an efficient and competitive financial system. State owned banks
have now become privatized. The legislative framework and the State Bank of
Pakistans supervisory capacity have been improved substantially. As a result, the
financial sector has also improved. Today, almost 80 percent of the banking assets
are held by the private sector banks and the privatization of nationalized
commercial banks has removed the culture of bureaucracy and formed a culture
of professionalism. Technology in banking sector has also revolutionized the
customer services and access on-line banking, Internet banking, ATMs, mobile
phone banking/ branchless banking and other modes of delivery have made the
transactions easier for the customers. The Credit Cards, Debit Cards, Smart Cards
etc. business has also expanded. The foreign exchange market that was highly
regulated through a system of direct exchange controls over suppliers and users
of foreign exchange has been liberalized and all purchases and sales take place
through an active and vibrant inter-bank exchange market. All restrictions have
been removed with full current account convertibility and partial capital account
convertibility.
Current trends in Pakistans banking

sector:
Pakistan faced a difficult macro environment since 2007. This was not due to
global recession but due to a series of factors that grew to destabilize the
country's macroeconomic condition. Due to this destabilization IMF in 2008
started its stabilization program for Pakistan. The global recession had an indirect
impact on the country. As mentioned above the global recession did not have a
major impact due to the recession but it had a major impact on Pakistans
exports. Major export partners were facing severe liquidity and trade was greatly
Page 21
hampered, on the other hand foreign investments in the country also reduced.
Other factors such as power shortages reduced the overall industrial capacity of
the country and due to increased cost of production the prices rose, the long
standing issue of inter-corporate circular debt, considerable decline in foreign
direct investment due to weak economic fundamentals, high inflation, security
concerns and above all, the high increase in fiscal deficit which broke all previous
records in the country's economic history, major environmental catastrophe in
the form of floods, all these factors contributed in weakening Pakistans economic
condition. The leading evidence of these various pressures on domestic firms and
industries is that their loan repayment capacity has been compromised, with a
consequent rise of non-performing loans (NPLs) on the banks balance sheets.
Furthermore, due to the deteriorated fiscal situation, public sector borrowed
heavily from banks for budgetary support, financing needs of Public sector
Enterprises (PSEs) and commodity operations. Accordingly, there has been a shift
in banks asset-mix towards credit to the public sector along with increased
performance for top rated corporations over Small and Medium Enterprises
(SMEs) and consumer that are generally less resilient to economic slowdown and
fragility in operating environment. Nevertheless, it has tested the resilience of the
banking sector in that banks have been forced to build emergency reserves and
provide for infected assets. Such requirements have been affecting their dividend
payments and consequently putting pressure on their share prices.
Assets structure of banking system:

In September 2010, the total assets of the banking system reached Rs 6.6 trillion.
The increase in the asset base has been a big achievement, especially given the
growth of only 8.8 percent in 2008.However; a key characteristic of this growth
has been the significant increase of 60 percent in investments in 2008 and then a
lowered growth of 17% in 2010. Reasons attributed to the rise include factors
such as: Change in banks risk perception due to mounting nonperforming loans
(NPLs) and second Greater borrowing needs of the government from scheduled
banks for budgetary purposes, for settling intercorporate receivables and to
finance commodity operations.
Page 22
Market share by size of banks:

In terms of concentration in the banking sector, the share of individual banks
assets in the total asset base continues to decline as the industrys competitive
position gradually improves. A decline in the concentration of large banks is also
evident from the fact that the market share of the big 5 banks decreased from
63.2 percent in 2000 to 50.4 percent during the year 2010.
Liabilities:
On the liability side, banks deposit base, the biggest source of funding for banks
in Pakistan, grew to reach Rs. 5021 billion during 2010, slightly lower than the
average growth percentage since 2001. Increase in deposits is largely attributed
to monetary expansion on the back of rising Net Domestic Assets (NDA) - due to
substantial government borrowing - and an increase in home remittances, an
important source of bank deposits. Banks on the other hand are also facing a very
strong competition by the NSS (national saving scheme) due to the much higher
return provided by NSS over deposits. As a result, low returns on deposits
continue to hurt deposit growth. The State Bank of Pakistan is struggling to
develop an appropriate response to the issue. (E.g. SBP introduced a minimum
rate of return of 5.0 percent per annum on all categories of savings/PLS savings
deposits with effect from 1st June 2008). However large banks due to their larger
market share and higher economies of scale are striving hard to maintain an
attractive return on deposits to hold on to their age old customers. On the other
hand newer and smaller banks are also coming up with attractive rates of return
and attractive offers to grab new customers. Borrowings from financial
institutions, another key component of liabilities, witnessed a substantial growth,
in sharp contrast to the small growth of 1.7 percent in 2008. In 2010, these
borrowings mainly constituted of borrowings from SBP, and repurchase
agreements in the inter-bank market.
Equity base:
Banks were now required to increase their minimum capital to Rs. 10 billion by
end2010. Notably, banks minimum capital requirement (MCR) was rationalized
Page 23
by the SBP in 2010. The MCR was revised in view of the prevalent challenging
economic environment, which had negative implications for banks profitability
and consequently their reserve accumulation.
Date
Equity (in billion Rs)
2007
544
2008
569
2009
660
Sep 2010 655
2011
2012
2013
Source: State Bank of Pakistan
Minimum
Paid
up
Capital(Net of losses)
Dead line by which to be
Increased
Rs 5 billion 31-12-2008
Rs 6 billion 31-12-2009
Rs 10 billion 31-12-2010
Rs 15 billion 31-12-2011
Rs 19 billion 31-12-2012
Rs 23 billion 31-12-2013
It is worth mentioning that, in order to meet the MCR, banking industry in

Pakistan is currently under a wave of Mergers and Acquisitions (M & As) and
there are on average 3( M & As )per year. The financial liberalization which also
led to a mushroom growth of banks, particularly the financially weak banks which may cause financial instability prompted the State Bank of Pakistan to
instruct all banks to improve their financial health by increasing the minimum
capital requirement (MCR) from Rs. 10 billion at end-2010 to Rs. 15 billion at end2011 and Rs. 23.0 billion by the end of 2013. The MCR requirement for DFIs was
to raise their paid up capital to Rs. 6.0 billion by December 2009. This has forced
banks (and DFIs) either to consolidate further by finding merger partners or exit
the market.
Page 24
Risk Assessment:
Credit risk
Credit risk is risk due to uncertainty in counterpartys ability to meet its
obligations. Credit risk is a major problem for Pakistani banking system. Credit risk
increased in 2010 because of unstable economic situation and weaknesses in the
operating environment along with devastations caused by recent unpredictable
floods and rains. As a result, NPLs again grew by 7.4 percent reaching Rs494
billion. Though the decline in advances in third quarter was usual this led to a
significant increase in NPLs. The major factors for decline in overall advances were
the; Unpredictable floods that affected credit operations. Risk-averse policies of
banks for increase in credit risk, especially by the bigger players Due to subdued
economic activity, banks became cautious in their lending business. This is visible
in the shift in their advances-mix from consumer and SME to corporate especially
the top-rated corporations faced a fall in advances, while several others faced a
marginal growth. However, growth by latter groups does not have any significant
impact due to their modest share in the system. Small banks share in advances
increased in the current quarter. In both public and private sector the contraction
of advances took place, mainly due to 6.5 percent decline in commodity finance
over the quarter. However the energy sector saw some growth in lending to
public sector corporations. Relative sharper decline in private sector shifted the
mix towards the public sector advances by 20 bps. Despite the overall decline, the
Corporate and Agriculture segments still managed to show some growth in
advances. The performance of both these sectors in terms of share in overall
loans remained relatively stable due to their scale of production, varied activity
and share in GDP. The growth in Agriculture segment was led by a single bank
holding 54 percent of agriculture portfolio various loan segments have shown
declining trends in fresh loan acquisition due to varied reasons. The decline in
commodity finance is cyclical in nature, whereas the depression in SMEs and
Consumer loans resulted from low credit demand, partly due to high interest
rates, high inflation and high degree of banks preference for managing existing
worthy borrowers.
Page 25
Interest rate is another important factor of credit risk in the economy. Pakistan's
official interest rate reported in November 2010 was at 14.00 percent. Therefore,
the volatile interest rate alters the cost of borrowing which is linked to the
repayment capacity of the borrowers. In this respect, high government
borrowing, constant fiscal deficits and the rising inflation are largely to be blame
for the lending rates remaining in double figures.
Official Interest/Discount rates in Pakistan (2006-2010)

(In percent)
The following table shows the government as a dominant borrower of the
banking sector.
Trends in deposits:
The deposits base of the banks declined by 4.9 percent from the year 2009 to
2010. The reason for this decline was the mainly the reduction between transfer
of deposits between banks and the deposits by customers also decreased. Further
due to Ramadan and pre Eid there were further borrowing which further reduced
the amount of deposits. But the investments in the national savings continued
constant and slow growth increasing the percentage of banks deposit to 34.5
percent during 2010. Deposits of the banking system posted a strong over-thequarter growth of 6.8 percent (YoY 13.5 percent). The banking system has been
facing a strong competition from Central Directorate of National Savings' (CDNS)
schemes in mobilizing deposits but flow of funds to CDNS has somewhat pacified
which helped banks to attract substantial growth in their deposit base.
Borrowings:
Borrowing on the other hand also lowered by 8.4 percent during Sep-10. Average
borrowings as a percentage of total asset lowered to 8.6% in Sep-10 compared to
8.8 percent in the last quarter.
Page 26
Profitability:
Profitability is very important for the smooth functioning of the banking sector.
The profitability of the banking system improved over the last year mainly due to
high net interest and non-interest income Profitability of the banking system
posted a gain of a (before tax) Rs 80.3 billion. In line with the increase in the profit
before tax, the profit after tax of the banking sector also posted a small decline
during the year 2010.Prevailing challenging environmental factors and banks
increased preference for low-return, risk-free assets continue to exert pressure
on banks profitability. However, high provisions and increasing administrative
expenses impeded the overall profitability. The profitability, however, varies
across banks. Improvement in ROA for banks with large assets base as opposed to
small sized banks indicates that earning performance of the banking system is
concentrated towards large sized banks with small sized banks under stress.
INVESTMENTS:
the asset mix of the banking system shifted towards the investments due to the
ongoing economic slowdown in economy. The investment portfolio of banks
particularly investments in government papers and bonds of PSEs grew
significantly and took the major share of the increase in banks' asset base.
Conclusion:
The banking sector of Pakistan is growing at a very fast pace. Due to the growth
and profits new banks are coming into the sector and are able to withstand this
difficult operating environment. Due to new entrants the competition is becoming
more intense than ever before. But still the older banks are dominating the
market share. Pakistanis on the other hand have major dislike for the interest
income therefore a large portion of 180 million populations does not use banking
services. Other than the dislike for banking sector some of the rural/semi-rural
areas are not reached by the banks. According to a world bank study on access to
finance published in 2008 estimated that only 14% of the population in Pakistan
uses banking services.
Page 27
Other than low penetration and difficult operating environment, one of the
biggest challenges for Pakistan is increase in the non-performing loans and low
private sector credit demand as high lending rates and weak economy is adversely
affecting the borrowers payment capacity. Undergoing these economic
difficulties banks faced another problem which was the heavy flooding in Pakistan
during August 2010 that caused humanitarian disaster and changed the economic
outlook of the country. Some researchers believe that weak economic growth is
for a short run only. Due to all these challenges, Pakistans banking industry is
rebalancing its assets from advances to investment. Banks elements of credit risks
are clearly visible from their inclination to invest in government securities and
their preference to meet financing needs of the government rather than the
private sector.
WEIGHTED AVERAGE DEPOSIT RATES:

Items
Unit 2013 2012

June Dec
Weighte %
d
average
deposit
ratefresh
deposit
Weighte %
d
average
deposit
rateoutstandi
ng
deposit
2011
Dec
2010
dec
5.11
6.01
7.06
7.41
2009 2008 200 2006 200

dec dec 7
dec 5
dec
dec
7.38 8.94 5.81 5.88 4.23
5.01
5.43
5.88
5.91
6.14
6.70
4.13 3.66
200 2003
4
dec
Dec
1.78
2.55 1.30 1.42
Page 28
National Billi
savings
on
schemes- Rs.
outstandi
ng
amount
2395 2,264.
.1
4
1913.
5
TOTAL DEPOSITS OF SCHEDULED BAMKS (STOCKS):

2003
2004
2005
1793, 2161, 2661,

176
098
697
2006
2007
2008
2009
2,999, 3,565, 3,801, 4325,

895
537
411
139
(3801
b)
2010
2011
2012
5,124, 5,874, 6,682,

308
689
648
(5012
b)
2013
June
7069,1
61
Million Rs.
Source: weekly statement of position which covers domestic operations of banks.
SAVINGS mobilized BY NATIONAL SAVINGS SCHEMES:

(Million Rs.)
Time
period
20042005
20052006
20062007
20072008
DSC
RIC
-8,759.1
40,663.0
-57,662.1 3,700.2
15,329.0
6,965.8
9,007.3
16,991.8
-273.4
13,802.9 8,277.1
-7,476.2
-5,800.3
-4,320.6
SSC
Prize
bonds
-83,311.9 9,357.0
Others
total
73,670.3
-49,706.8
82,768.0
6,000.9
74,470.4
67,651.4
69,153.5
86,639.5
Target
(90.5b)
Page 29
20082009
-27,441.3 40,094.3 128,469.0 14,650.

0
20092010
-32,354.8 44,535.0 61,996.1
20102011
20112012
9,748.0
20122013
29,363.6
7,297.0
38,556.
7
46,946.0 43,961.0
41,083.
3
43,971.6 -52,834.1 56,324.
2
34,035.3 42,799.3
48,921.
2
actual
invest(89.5
b)
111,451.5 267,223.5
(267.20 b)
12.5%
112,034.8 224,767.7
Doubt
(225.70 b)
Target
(220b)
93,205.3 234,943.7
133,598.4 188,357.1
(188b)
Target
(146)
Actual (187
b)
179954.9 335,074.3
Deposit
mobilize is
(229.5b
july nov)
288.96 b
for feb
Source: central directorate of national savings
Page 30
Increase in profit rates on CDNS products to hit banks deposit

growth
December 02, 2008
The move by the government of increasing profit rates on Central Directorate
National Saving (CDNS) products by 170-240 bps to above 18 per cent in a bid to
finance fiscal deficit hunted the banking sector's deposit growth in calendar years
(2008-09) despite offering attractive returns on various deposit schemes by the
banks. Frahan Rizvi, Research Analyst at JS Global assumes 4 pc and 6 pc banks'
deposit growth in 2008 and 2009, respectively, compared with a CAGR of 18% in
the last 5 years (2003-07). The 170-240bs increase in profit rates of NSS schemes
to 15.0-16.8% (excluding DSCs) helped government attract additional deposits
and reduce its reliance on SBP borrowings to finance budgetary deficits going
forward. In addition to increase in NSS rates, fiscal deficit figures for 1QFY09,
according to which fiscal deficit reduced considerably to Rs139bn (1% of GDP) as
against fiscal deficit of Rs158bn (1.6% of GDP) in 1QFY08. While these numbers
look encouraging, they are a bit misleading as the reduction in fiscal deficit was
mainly led by a 69% cut in development expenditure to Rs39bn in 1QFY09 as
against expenditure of Rs128bn recorded in 1QFY08.
Corporate sector entry in NSS to hurt

banks deposits
July 03, 2009
The overall deposit growth of the banking sector may remain motionless in this
fiscal as corporate sector has been allowed to invest in National Saving Schemes
(NSS). Therefore with relatively higher returns NSS has the capacity to hurt the
deposit growth of banks. The higher deposit cost pressure for banks is anticipated
to exist due to higher NSS target for FY10, while inter-bank competition is also
expected to persist for deposits on account of prevalent differential between NSS
rates and banks weighted average deposit rates (7.54 per cent) which are
Page 31
remained significant. It is mentioned that the profit rates on NSS has been
reduced from 0.5 per cent to 1.9 percent on different schemes. The new rates on
NSS components would be applicable on new deposits to be attracted by the
schemes
from
July
1,
2009.
Analyzing the impact of NSS profit rates cut on banking sector, the downward
revision complements expectations of monetary easing. However, the
government decision to finance the budget through NSS would call for relatively
higher returns compared to other investment opportunities, such as government
securities
for
corporate
and
bank
deposit
for
individuals.
1HFY09, banks assets growth got skewed towards investments as investments
growth of 35 per cent CYTD (Rs349b) while advances grew by a meager 0.2 per
cent (Rs5.6b). The asset growth during the period remained heavily dependent
on SBPs injection which is evident through relatively slow growth of 4.9 per cent
(Rs191b)
in
deposits
during
the
period,
he
added.
Considering the slow growth of money supply, we anticipate these trends to
continue in short term, at least till the sizeable foreign inflows materialise, which
are
expected
in
2QFY10
he
projected.
The govt has announced 1QFY10 targets of Rs325b and Rs30b for T-bills and PIBs
respectively, down by 38 per cent and 25 per cent on quarter-on-quarter basis.
However, target for NSS has been increased by 78 per cent to Rs231b for FY10,
which indicates higher reliance on NSS for budgetary financing, he added.
Earlier, the Federal government announced amendments in tax regulations for
provisions/bad debts by allowing provisions up to 1 per cent of advances.
Banks deposits up Rs73b

August 21, 2009
The commercial banks showed an encouraging growth in their deposits during

January to March 2009 period. Total deposits of the scheduled banks have
increased to Rs3.874 trillion in March 2009, from Rs 3.801 trillion in December
2008. Despite global and domestic slowdown the banking sector has indicated a
significant growth in deposits that was a good sign for the growth of the financial
Page 32
sector in Pakistan. Commercial banks continued to depict growth in their

deposits, assets and also earned an impressive profit in 2009 although the
economy of the country was still experiencing a slowdown .Pakistani commercial
banks have shown resilience and a strong potential to growth. In 2009 the
commercial banks focused on consolidation of their existing business because of
recession but in 2010 the banks started aggressive marketing as economy of the
country moved towards recovery and growth.
Return on NSS, bank deposits still negative: SBP

Dec 16:
Given increasing inflationary pressures the real rate of return on both NSS
instruments and bank deposits are flying around the negative zone, said the State
Bank in a latest detailed report while reviewing financial stability. Economists and
analysts have been critical of this situation as they said the real negative return on
deposits and NSS badly hamper the savings in the economy. Both the State Bank
and the government left the issue unresolved for many years and a never-ending
borrowing habit of the government led to high inflation now crippling the
economy. Despite a better return on National Saving Scheme, which is much
higher than return on bank deposits, the high inflation negated the benefits of
higher return. According to the State Bank`s data given in the report, the overall
return on banks` deposits in the first half of the financial year (FY-10) was 8.6 per
cent, while average return on NSS was 12.5 per cent. In the second half of FY10,
the return on overall banks` deposits fell to just 6 per cent compared to 12.5 per
cent average return on NSS. Despite the attractive rates on NSS the investors get
a negative return, which shows a profound problem of inflation eating up the
entire benefits of saving and investment, said Mohammad Imran, a senior
analyst. The inflation is not the byproduct of banks or the State Bank. It is the
government, which relies heavily on borrowing and creates inflation that
ultimately deprives the depositors from real returns, said a senior banker.
He did not explain how banks still earn billions each year, while their depositors
get negative return. The State Bank report shows that the widening fiscal deficit
Page 33
attracted massive liquidity in the NSS since the return was increased significantly.
In FY09 there was significant upward revision in NSS rates in the consequences of
growing fiscal deficit, which attracted historic net flows of Rs250.1 billion, said
the SBP. Consequently, share of NSS in total deficit financing rose to 37 per cent,
from 10.3 per cent in FY08. However, by end FY10, the share declined to 20 per
cent with the decline in NSS rates, the report added.
NSS portfolio crossed historic mark: CDNS

December 12, 2010
RECORDER REPORT
The National Saving Scheme (NSS) has witnessed remarkable increase in the
inflows during the last three years tenure of democratic government and the total
portfolio has crossed the historic figure of Rs 1,721 billion.
It is baseless that the due to shocked trust on the government, the funds are
being withdrawn from the NSS. In fact, the NSS has witnessed phenomenal
increase in the inflows during the last three years tenure of democratic
government and the total portfolio has crossed the historic figure of Rs 1,721
billions". It further said that the total net inflow of fund in National Savings
schemes during FY-2007-08 remained Rs 89.5 billion against the initial target of Rs
40 billion. It said that during FY-2008-9 the government had fixed the net
investment target of Rs 150 billion but the NSS has witnessed a record
mobilization of funds and attracted the total net investment to the tune of Rs
267.20
billion
highest
in
the
history
of
National
Savings.
"It is due to unshakeable trust of the valuable investors that despite of decrease
in profit rates, the net investment during FY-2009-10 was recorded at Rs 225.70
billion against the target of Rs 220 billion. These figures are sufficient to deny the
groundless argument that funds are heavily withdrawn from NSS", the CDNS
statement said. The statement further said that despite of financial crunch and
shocking flood in the country during Current Financial Year, the NSS has
successfully fetched the gross deposits of Rs 252 billion and net deposits of Rs
67.70 billion as on November 30, 2010, which reflects the fruitful and attentive
Page 34
efforts of the organization besides rock solid trust of investors.

The statement added that it is worth mentioning that NSS is tapping currency in
circulation especially from remote areas of the country, it is another example of
trust of the investors that total deposits fetched by all the commercial banks
during first quarter of CFY stands at Rs 16 billion whereas the net investment in
NSS
in
the
same
period
was
Rs
42.50
billion.
As the CDNS pays off the matured loans from its gross receipts and deposits the
net receipts into the government kitty that is why the negative inflows were
recorded in DSC during FY-2008-10, it further clarified. It added that as all the high
cost debt raised during FY-1998-2000 has been matured and paid off during last
two years, the healthy inflows are being recorded in Defence Certificates. During
first five months of CFY (July-November) the total gross investment made in DSC
has reached Rs 16.4 billion with the net investment of Rs 2.00 billion.
It said that the CDNS/ Ministry of Finance is fully committed to serve the small
and middle class savors by introduction of innovative products i.e. Short Term
Savings Certificates and Web-based application for online investment for
investors living in the country and abroad in addition to offering subsidized return
to our pensioner, widows and senior citizen. A state of the art web-based
application for online investment shall be initiated for Non Resident Pakistanis
enabling them for hassle free investment in NSS for risk free and competitive
return, it added.
Copyright Associated Press of Pakistan, 2010

Rs 115b National Savings investment recorded in Pakistan
Pakistan Times Business & Commerce Desk
The performance of National Savings has improved, particularly during past
couple of years as its investments have recorded tremendous growth, Abdul
Ghafoor Baloch, an official of CDNS said by adding; the total investments during
the last financial year were recorded at Rs.267 billion against the set target of
Rs.150 billion. For the current financial year, the investments target of the
National Savings is Rs. 241 billion out of which it has already collected Rs.115
billion till the end of December. Giving estimated figures of the investments made
Page 35
till January, he said that about 132 billion have been invested till January. The
National Savings aims to launch new schemes including the Sharia Complaint
Paper to facilitate those who are interested in Islamic way of savings. The savings
on this assets-based paper would be on profit-loss sharing basis and it would not
include interests. This scheme would be launched during the current year,
Ghafoor added. The National Savings would also launch bonds/papers for
overseas Pakistanis in foreign currency to facilitate Pakistanis living abroad to
save their incomes adding that the project was in pipeline and under
consideration and would be finalized as soon as possible. To a question, he said
that the project of linking all the 371 centers of National Savings through online
computerization would be completed during next three to four years adding that
the PC-I of the project has already been approved by the government and work
was also going on. He said that the online system would connect all the 371
centers of the National Savings across the country to make the system userfriendly and facilitate the customers. Baloch said that interest on Defence Saving
Certificates (DSC) s from July 1, 2009 is 8.00 percent while after 10 years
(Compound rate) is 12.15 percent. Similarly the profit in Special Saving Certificate
Registered (SSCR) in the first five periods is 11.60 percent while in the last period
the profit rate is 12.00 percent per annum (pa) from July 1, 2009. He said that
average compound profit on the scheme is 11.67 percent (pa) from July, 1, 2009.
Baloch said that on Regular Income Certificates (RIC) is 12.00 percent per annum
from July 1, 2009. Likewise on saving accounts, the profit with cheque facility is
8.00 percent (pa) while without the check facility is 8.50 percent per annum from
July, 1, 2009. On Pensioners Benefit Accounts and Behbood Saving Certificates the
profit per annum is 14.16 percent from July, 1, 2009.
3 top banks lose Rs 13. 1b

Monday, 21 February 2011
Despite some improvements in the deposit base of the banking industry, three
leading commercial banks, one from the public sector and two in the private
sector, have posted Rs13. 1 billion deposit reduction during July-November
(FY11). This trend is widely attributed to a general shift in agents liquidity
Page 36
preferences, especially the government, which has been away from bank deposits
to other non-bank sources in the current fiscal year. An SBP report stated that the
government had witnessed unusual deposit withdrawals at both federal and
provincial levels from large few banks during the last five months of the ongoing
fiscal year. This was in contrast to net inflows during the same period in previous
years. According to the report, banks customer deposit base grew by 1.0 per cent
during July-Nov FY11, compared with a decline of 0.1 per cent in the same period
last year. This growth appears to be driven by an exceptionally sharp inflow in the
month of November 2010 wherein the flow of banks deposits increased to over
Rs100 billion. Excluding November, deposit performance for July-October F11
showed a larger reduction than in the same period in past years. From July to
October 2010, deposits experienced a major decline of 1. 2 per cent, compared
with a drop of 0. 3 per cent in the equivalent month last year; and growth of 0.1
per cent for FY07. 08, the report said. The currency to deposit ratio, and, M3 to
M2 ratio, have been rising over the last couple of years. In particular, while an
increasing currency-to-deposit ratio indicates a change in preferences toward
holdings; the rise in M3 relative to M2 represents the growing competition banks
face in deposit mobilization from non-bank sources, most notably National Saving
Schemes (NSS), the report revealed. The imposition of withholding tax on
financial transactions and negative real returns on bank deposits are affecting the
deposit growth of the industry. Higher real returns, along with the security of
investments in NSS instruments have provided strong competition to banks time
deposits in recent years, it added.
Courtesy: Business Recorder
National Savings portfolio doubles to Rs2000bn

Friday, 03 February 2012
Posted by Muhammad Iqbal
Page 37
ISLAMABAD: The investment portfolio of Central Directorate of National Savings

(CDNS) has doubled to Rs2,000 billion during past four year, Director General of
the organization Zafar M. Sheikh said here on Friday. Talking to journalists after
formally launching Rs25, 000 Prize Bond, DG National Savings, Zafar M Sheikh said
that the saving culture in Pakistan had been very low as compared to the other
countries of the world but this trend in our country has now changed as the
investments are now in double digits instead of single digit. He was hopeful that
the Rs187 billion saving target set for this fiscal year would be met within the
stipulated time as 97 percent target has already been met till January 2012. "So
far collection has reached to Rs104 billion," he remarked.
Copyright APP (Associated Press of Pakistan),

National Savings Schemes may increase profit rates
ISLAMABAD:
The government may increase profit rates of National Saving Schemes to keep the
avenue lucrative as bonds have become an alternate for investors with a spike in
its returns of late. The move may also help attract new individual-investments in
the National Saving Schemes to stabilise falling deposits, as the governments
decision to ban institutional investments has resulted into negative growth in the
National Saving Schemes deposits last year. A decision to this affect is likely to be
announced by the end of this month, an official of the finance ministry told The
Express Tribune. If the government decides to increase mark-up on investments in
national saving schemes, it will be applicable only on fresh investments, they
added. The increase may be in the range of 16 to 40 basis points, depending upon
the instrument the investors choose. However, analysts advocate at least 100
basis points equal to 1% increase to keep the NSS papers attractive. The latest
auction of Pakistan Investment Bonds (PIBs) has unnerved the market, as the yield
on ten-year bonds rose to 13.11 per cent, 41 basis points increase in a single
month. Similarly, the yield on five and three years PIBs increased 21 basis points
and 10 basis points, respectively. This has made the NSS papers less attractive.
Page 38
If the government wants to keep a source other than the banking industry for
the budget deficit open, it will have to increase profit rates of the national saving
schemes, said Muzammil Aslam, an analyst at JS Global Capital. According to
sources, the government may increase return on Special Saving Certificates to
11.83 per cent, an increase of 16 basis points over current rates of 11.67 per cent.
The authorities have also worked out 39 basis points increase in profit rates on
Regular Income Certificates. The return on RICs is likely be jacked up to 12.15 per
cent against existing rates of 11.76 per cent, official said. The Defense Saving
Schemes rates may jump to 12.26 per cent, an increase of 36 basis points over
present rates of 11.9 per cent. The rates of Behbood Saving Certificates and
Pensioners Benefit Accounts are already higher than the PIBs rates. However, the
government may also decide to increase profits on these schemes as well. After
the government banned institutional investment in national saving schemes last
year, the Central Directorate of NSS is struggling to achieve this years saving
targets. The NSS received new deposits of Rs109.5 billion from January 2011 to
January 2012, which is Rs9.3 billion or 7.8 per cent less than the net investments
received in the corresponding period of the previous year. The gross investments
during this period remained at Rs467.6 billion. However, an amount of Rs358
billion was either returned after maturity or withdrew by institutions in wake of
the ECCs ban.
Published in The Express Tribune, March 20th, 2012.
Govt. revised downward profit rates on National Savings

Schemes
Friday, 24 August 2012
Posted by Asad Naeem
ISLAMABAD: In response to considerable slash in discount rate by State Bank of
Pakistan, the Federal Government has downward revised the profit rates on
National Savings Schemes for the investment made on or after 27-08-2012.
Page 39
According to a statement of CDNS issued here Friday said that the instant revision
has been made in the backdrop of current market scenario and in accordance
with the government's policy to provide market based competitive rate of return
to the investors of National Savings. As per Notification issued by Federal
Government the new rates for Special Savings Certificates(R)/Account, Regular
Income Certificate, Defence Savings Certificates and Savings Accounts has been
fixed at 10.80%, 11.04%, 11.50% and 7.40pc respectively.
Copyright APP (Associated Press of Pakistan), 2012

Reduction in NSS profit rates
October 16, 2012
RECORDER REPORT
A cut in the NSS rates, it may be mentioned, was not unexpected. The range of
downward adjustment was also, more or less, known beforehand. This was
obviously due to the linkage of change in the State Bank's policy rate to the
revision in rates on NSS. The government had already reduced profit rates on NSS
in August this year by a substantial margin, following a cut of 1.5 percentage
points in the discount rate by the SBP earlier in the month.
The bankers, however, would certainly be pleased by the announcement. Since
both the banks and the Directorate of NSS compete in the field, though for
different reasons, to mobilize higher deposits from the same groups of
population, banks would now be in a better position to attract the attention of
savers and enlist their deposits. This would enable them to enlarge their lending
activities and earn more profits. No less happy would be the government.
The State Bank's policy to reduce the discount rate has enabled it to lower the
NSS rates and contain its debt servicing liability. The argument that a reduction in
the rates on NSS could deprive the government of a reliable source of financing
the budget to a certain extent is not valid in the current situation. The experience
suggests that investors in NSS are not likely to shift to other sources of investment
due to a reduction in rates on these schemes for a variety of reasons.
Page 40
Moreover, the banks are more than eager to compensate for a shortfall in
investment in NSS, if any, and meet the government's budgetary requirements in
order to make more money from risk-free assets. All in all, the present reduction
in the rates on NSS would hurt investors financially but was necessitated by the
recent decision of the SBP to lower the policy rate and would be welcomed by
banks and also benefit the government. Lowering of rates could also adversely
affect the saving rate of economy but its net impact could only be marginal due to
the overwhelming influence of other factors on the savings of economy at the
moment and the size of the cut which is small.
Copyright Business Recorder, 2012

CDNS products fetch Rs 208 billion investment this year: data
November 21, 2012
ASMA RAZAQ
The total investment made in various savings products of the Central Directorate
of National Savings (CDNS) has increased by Rs 119 billion from Rs 89.5 billion in
2007-08 to Rs 208 billion in 2012-13 (till date). Data obtained by Business
Recorder shows that during the fiscal year 2007-08, the investment target of
CDNS was Rs 90.5 billion while the Directorate amassed a total investment of Rs
89.5 billion. In 2008-09, the Directorate fetched Rs 267 billion against the target
of Rs 222 billion. During 2009-10, the investment target of CDNS was Rs 219
billion while the Directorate gathered Rs 225 billion. During 2011-12, CDNS
achieved a total investment of Rs 187 billion against the target of Rs 146 billion
while for the current fiscal year, CDNS was given an investment target of Rs 83.9
billion and so far, the total investment made in its various products has touched
at Rs 208 billion. Data also shows that the Directorate has automated 111 offices
across the country while PC-1 for the phase II of computerization of National
Savings (NS) centers has been submitted to the Ministry of Finance for complete
automation of eight regional directorates with the installation of ATM machines.
Sources in the CDNS said that CDNS was making efforts to reduce the
government's dependency on commercial banks, State Bank of Pakistan, IMF and
Page 41
World Bank for borrowings. "Against the proportionate investment targets of Rs

84 billion set for the first five months of 2012-13, CDNS has made an investment
of Rs 208 billion while investment amounting to Rs 4 billion is in the
pipeline.Total Portfolio of National Savings (NS) has increased from Rs 1,070
billion to Rs 2,284 billion over the past five years with a net increase of Rs 1,182
billion," sources said.

CDNS attracts Rs 180 billion investments in four months
November 10, 2012
RECORDER REPORT
The Central Directorate of National Savings (CDNS) has attracted an investment of
Rs 180 billion during the first four months of current financial year 2012-13,
against the target of Rs 75 billion through its various saving schemes which is a
record in history of savings in the country. "This is a reflection of confidence of
the investors on investments of various national saving schemes", a statement of
the CDNS issued here. The statement further said that Central Directorate of
National Savings (CDNS) is playing an important role and busy in the socio
economic development of the country by promoting safest investments in savings
schemes of the country. The statement further said that the CDNS has decided to
launch Rs 100 denomination prize bonds from November 16, and the bonds will
be available for sale in all branches of the CDNS across the country. The first prize
of the Student Welfare bonds will be Rs 700,000 while second prize of the bond
would be Rs 200,000 each would be given to three winners and the third prize of
Rs 1000 each will be given to the winners of 1199 bond winners.
The statement said that the first draws of Rs 100 denomination bonds on
February 15, 2013 in Karachi. The statement added that the objective of the
launching the students bonds was to encourage and promote of savings habits
among students.
Copyright Associated Press of Pakistan, 2012

Page 42
NSS deposits jump by 290pc

KARACHI, Dec 27: Falling interest rate has diverted deposits from banks to
National Saving Schemes as it amassed huge sums in five months, more than the
deposits mobilized during the fiscal year 2011-12. Latest official figures showed
that deposits mobilized by the government suddenly witnessed a jump of 290 per
cent during July-November of the current fiscal year. During the said period, total
deposits mobilized under NSS rose to Rs229.5 billion. This was much higher than
Rs77 billion mobilized under the same head during five months of previous year.
Thought the NSS rates were revised downward, these are still attractive than
banks. Under the umbrella of NSS, the Defense Saving Certificate offers 11.04 per
cent, Regular Income Certificate offers 10.56 per cent, Special Saving Certificates
9.90 per cent, Behbood Saving Certificates offer 12.96 per cent and Pensioners
Benefits Account offers Rs12.96 per cent. According an official report, these rates
were last revised in October and are applicable till to-date. The figures showed
that the government could mobilize Rs188 billion during the last entire fiscal year.
Banking experts said the rates offered under the NSS were still attractive
compared to banks which are facing tough time after losing their attraction for
government papers. The State Bank lowered the policy interest rate by 4.5 per
cent to 9.5 per cent, from 14 per cent during the last 15 months. This quick shift in
the interest rate hit the banks effort to raise their deposits. Experts said the poor
return from banks forced depositors to put their money in NSS which is more
attractive and risk free. They said that the sudden rise in NSS indicates the
deposits from banks came out to land in NSS. Banks have been profitable for the
last many years by just investing their money into government papers which
offered the return as high as about 14 per cent. The wide banking spread has
been a practice for banks as they used to keep most of their profits and pay poor
return to depositors. This high profit strategy hurt banks deposit mobilization,
particularly small and medium banks failed to raise money as per their
requirements. A number of banks, at least nine banks, remained unable to meet
the Minimum Capital Requirement. The low deposit base of small and medium
banks deprived them of share in profit of the banking in Pakistan since the five big
banks earn over 80 per cent profits of the entire banking industry.
Page 43
Deposits at National Savings rushed by 198% in 5M FY13

Alfalah Securities Limited
Submitted by PPI News Agency on December 28, 2012
Total deposits mobilized under National Saving Schemes (NSS) have increased to
PKR 229.5 billion during 5M (Jul- Nov) FY13 which was PKR 77 billion during the
same period last year, depicting a surge of 198.05%. According to Alfalah
Securities Limited believes, the significant decline in discount rate since last year
by Central Bank has diverted more funds to NSS which still remains a profitable
and risk-free investment avenue. SBP has cut discount rate by 4.5% to 9.5% from
14.0% during the last 15 months. However, NSS are still offering better returns
where Defense Saving Certificate offers 11.04%, Regular Income Certificate offers
10.56%, Special Saving Certificates 9.90%, Behbood Saving Certificates offer
12.96% and Pensioners Benefits Account also offers 12.96% p.a. return on
investment.
Deposits in Pakistans saving schemes surge

December 29, 2012
During the said period, total deposits mobilised under NSS rose to Rs229.5 billion.
This was much higher than Rs77 billion mobilized under the same head during five
months of previous year. Thought the NSS rates were revised downward, these
are still attractive than banks. Under the umbrella of NSS, the Defense Saving
Certificate offers 11.04 per cent, Regular Income Certificate offers 10.56 per cent,
Special Saving Certificates 9.90 per cent, Behbood Saving Certificates offer 12.96
per cent and Pensioners Benefits Account offers Rs12.96 per cent. Banking
experts said the rates offered under the NSS were still attractive compared to
banks which are facing tough time after losing their attraction for government
papers. Experts said the poor return from banks forced depositors to put their
money in NSS which is more attractive and risk free. They said that the sudden
rise in NSS indicates the deposits from banks came out to land in NSS. Banks have
Page 44
been profitable for the last many years by just investing their money into
government papers which offered the return as high as about 14 per cent.
JUMP IN NSS DEPOSITS

January 02, 2013
RECORDED REPORT
It seems that savers in Pakistan, rather than going to banks, are queuing up at
National Saving Centers to earn a better rate of return on their deposits.
According to the latest data, total deposits mobilised under National Saving
Schemes (NSS) during July-November, 2012 amounted to Rs 229.5 billion as
against Rs 77 billion in the corresponding period last year, showing a tremendous
jump of 290 percent. There could be many reasons for such a spectacular rise in
NSS deposits. During the last 15 months or so, State Bank has decreased the
policy rate by 4.5 percent from 14 percent to 9.5 percent which has depressed the
overall interest rate structure and pushed down the rate of return on bank
deposits by a substantial margin. Though the minimum interest rate of 6 percent
on saving and time deposits prescribed by the SBP is still intact but this is much
lower than offered on various saving schemes of the government.
For instance, Defence Saving Certificates till December 31, 2012 offered 11.04
percent annual rate of return while interest earned on Regular Income
Certificates and Special Saving Certificates was 10.56 percent and 9.90 percent
respectively. Bahbood Saving Certificates and Pensioners Benefit Accounts
offered to a certain category of depositors earned a higher rate of return of 12.96
percent. Obviously, poor return offered by banks forced the depositors to place
their savings in NSS which is more attractive and entirely risk-free. The shift of
private funds from banks to national saving centers has occurred despite the fact
that working conditions in the banks' branches are relatively better. This shows
that depositors are prepared to undergo certain amount of inconvenience for
getting a higher rate of return if overall economic environment in the country, in
particular per capita income and the rate of inflation, is discouraging or
deteriorating at a certain point of time. The present growth in NSS deposits
Page 45
shows that the amount mobilized by the government through this source could
be nearly as high as Rs 500 billion during FY13 as against Rs 188 billion during
2011-12. What could be done to reverse this trend and mobilize normal level of
savings from NSS is fairly obvious and intuitive. Of course, this undesirable
development is the result of certain growing weaknesses of the economy and the
financial system and if these are not properly addressed, NSS deposits would
maintain their present trend and continue to be the main source of financing the
budget deficit. The government is not offering higher rate of return on NSS only
on compassionate grounds, or for helping the disadvantaged sections of society
like senior citizens or pensioners, but to meet the growing gap between its
revenues and expenditures. It is, therefore, obvious that unless the provinces do
not share financial burden as expected after the latest NFC Award, higher
resources are not mobilized and expenditures shortened by the government and
budgetary support from other sources is not adequately available, it would not be
possible to reduce the overall fiscal deficit and lessen reliance on NSS.
Another factor which has popularized the NSS among the public and attracted
higher level of household savings through this source is the inefficiency of the
banks to play their intermediary role properly between savers and investors.
Lower rate of return on deposits due mainly to higher spreads coupled with the
growing opportunity of investment in government securities at reasonably
attractive rates and easy access to liquidity from the SBP has reduced the banks'
incentive to mobilize higher level of savings from the economy and channelize
them into productive purposes to energize private sector activity in the country.
Seen from all angles, it is clear that most of the savings of the economy, which are
already at a critically low level, are being used for government consumption and
not utilised for financing the credit requirements of the private sector which is the
principal source of promoting growth and generating employment. It is,
therefore, imperative that such a negative trend is arrested as soon as possible
with a view to revive growth impulses of the economy and contain future debt
servicing burden of the country within reasonable limits.
NSS-THE FEAST THAT FEEDS THE BEAST OF GOVT.BORROWING

Page 46
April 09, 2013

So far in the current fiscal, interest rates have dropped by 250 basis points and
profit rates on National Savings Schemes (NSS) have also been revised downwards
accordingly. Despite the substantial reduction in profits, savers continue to stick
to NSS, like bees on honey. During 8MFY13, more than Rs288.96 billion have
been parked in NSS by domestic savers; surpassing the annual target by Rs64
billion
with
months
to
spare!
Q: Given that rates are dropping, yet deposits in NSS continuing to tower; are
investors
behaving
irrationally?
That comparison highlighted that deposits into NSS have risen, whenever the gap
between CPI and discount rate widened over past few months; thus offering
depositors a higher real return. The jump is pronounced especially in the absence
of other viable long-term saving alternatives. Moreover, the sovereign guarantee
attached with NSS attracts the risk-averse investors of Pakistan.
During the same month, the Federal Government allowed public sector
corporations and institutions to invest in National Savings Schemes, which was
barred in April 2011. This encouraged trusts, pension funds, provident funds and
other institutions to seek refuge in NSS, offering at least double rates than banks
do. The second and third anomalous growths in NSS deposits were seen in May
2012 and August 2012. Expectations of a significant reduction in the discount rate
pulled savers towards NSS, especially those products under the CDNS portfolio
that allow savers to lock in rates for up to a year.
A glance at the others header reported in SBP data offers justification for this
argument, as deposits in Behbood and other certificates, shielded against
downward rate revisions went through the roof in the corresponding period.
Going forward, with interest rates likely to rebound from Jun-2013 ahead of IMF
programme and CPI also likely to rebound in FY14 on the heels of weakening
rupee-dollar exchange rate and a possible increase in international oil prices that
will spill over on power tariffs, fuel prices and other CPI heads, participation in
NSS will depend on how profit rates on NSS and real interest rates take shape.
National Savings attracts Rs 180bn investment

Page 47
ISLAMABAD (APP): The Central Directorate of National Savings (CDNS) has

attracted an investment of Rs 180 billion during the first four months of current
financial year 2012-13, against the target of Rs 75 billion through its various
saving schemes which is a record in history of the country.
\"This is a reflection of confidence of the investors on investments of various
national saving schemes\", said a statement of the CDNS issued here on Friday.
The statement further said that Central Directorate of National Savings (CDNS) is
playing an important role in the socio economic development of the country by
promoting safest investments in national savings schemes. Bonds would be
The statement further said that the CDNS has decided to launch Rs 100
denomination prize bonds from November 16, and the bonds will be available for
sale
in
all
branches
of
the
CDNS
across
the
country.
The first prize of the student welfare bonds will be Rs 700,000 while second prize
of the bond would be Rs 200,000 each for three winners and the third prize of Rs
1000 each will be given to the winners of 1199 bond owners.
The statement said that the first draws of Rs 100 denomination held on February
15, 2013 in statement added that the objective of the launching the students
bonds was to encourage and promote the savings habits among students.
PROBLEM OF NSS
May 24, 2013
MUNIR
AHMED
SHAIKH
In fact National Savings Organization is undergoing the process of transformation
and modernization; in this regard 89 branches have been automated across the
country out of total 374 branches. The next phase of computerization is under
way and it is expected that by the end of 2015 all the NSCs under CDNS will be
fully computerized to provide state of the art facilities/ services to our valued
clients besides streamlining the operations. This will eventually lead to better
planning, monitoring and reporting. CDNS, however, feels it necessary to clarify
that NSS deposits are comprised of 90% individual investors. According to a
departmental analysis in 2011 it was observed that only 10% investments were
made by selected eligible institutions. It is worth mentioning that National Savings
Page 48
Organisation is tapping currency in circulation especially from remote areas of the

country through its network of 374 National Savings Centers all over Pakistan with
the fruitful and diligent efforts of the organization besides rock-solid trust of
investors. However, government is considering further expanding the outreach of
National Savings Centers to semi-urban and rural areas of the country, in order to
increase the real savings. It also needs clarification that the National Savings is
offering subsidized rates. As per approved Government policy the rates of
National Savings Schemes (NSS) are fixed @ 95% weighted average yield of
Pakistan Investment Bond (PIB) of comparable maturities. This policy was
predicted in 2008 in order to avoid market distortions and cannibalization.
According to a recent departmental study, the overall weighted average cost for
NS deposit has been worked out at 9.08% per annum which is lesser then
identical bonds. The Central Directorate of National Savings is playing a vital role
in the promotion of savings among the masses with more than seven million
customers and a portfolio of Rs 2400 billion. It is the trust of the valuable clients
that they prefer to invest in NSS for better and risk free return without any hidden
charges. The CDNS/ Ministry of Finance is fully committed to serving the small
and middle class savers by introduction of innovative and customized products
e.g. Short Terms Savings Certificates, Student Welfare Prize Bond, National
Savings Bonds. Moreover, our Web-based application for online investment for
investors living in the country and abroad is in pipeline. Many new products are
also in the offing to tape the untapped segment of economy.
Page 49
REFERENCES:
Economic Updates - Pak Major Financial News
State Bank Publications
http://www.sbp.org.pk/fsr/2009/pdf/Special%20Section%201%20%20NPLs
%20-%20Cyclical%20or%20Structural.pdf
http://www.sbp.org.pk/fsr/2010/pdf/2GovernmentBorrowing.pdf
http://www.sbp.org.pk/publications/FSA/2005/Chapter_3.pdf
http://www.sbp.org.pk/bsrvd/2010/C7.htm
http://www.sbp.org.pk/bsd/10YearStrategyPaper.pdf
http://www.sbp.org.pk/publications/q_reviews/Q_Review_Sep_10.pdf
http://www.indexmundi.com/pakistan/gdp_real_growth_rate.html
http://www.indexmundi.com/pakistan/gdp_composition_by_sector.html
http://www.defence.pk/forums/economy-development/60258-economicsurvey-confirms-4-1-percent-gdp-growth.html
https://www.cia.gov/library/publications/the-worldfactbook/fields/2012.html
Need an essay? You can buy essay help from us today!
Read
more:
http://www.ukessays.com/essays/finance/money-andbanking-report-of-pakistan-banks-finance-essay.php#ixzz2cuqBLn5t
http://pakistantimes.net/pt/detail.php?newsId=8591
16, Jul 2013, CEST. Welcome to the beta version of Econ Stats, the
Economic Statistics Database service provided by EconomyWatch.com.
International Monetary Fund (IMF)
Lachlan McGregor is an economic consultant and was formerly Associate
Professor
of
Economics,
Monash
University
(http://www.abc.net.au/money/default.htm)
Page 50

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NATIONAL SAVINGS

(COMPARISON OF BANKS AND

National Savings (Comparative analysis of banks and savings centers)

National Savings (Comparative analysis of banks and savings centers)

I will do the past data analysis.

SIGNIFICANCE OF THE STUDY:

The Components of Aggregate Saving

National Savings (Comparative analysis of banks and savings centers)

corresponding current account deficit. Thus our utilization of foreign saving is

Gross National Savings (% of GDP)

Gross national savings

Monetary aggregates in Pakistan:

measures M0, M1 and a broader aggregate M2. The M2 is composed of currency

NSS FEATURES AND MOBILIZATION TRENDS:

PROFILE OF SELECTED NSS INSTRUMENTS:

is 0.5% to 2 0.25 % to 0.25 % to

National Savings (Comparative analysis of banks and savings centers)

** Excluding banks and insurance companies

National Savings (Comparative analysis of banks and savings centers)

As mentioned above, the most pertinent objective of establishing the central

National Savings (Comparative analysis of banks and savings centers)

SHARES OF VARIOUS NSS INSTRUMENTS IN OUTSTANDING NSS

National Savings (Comparative analysis of banks and savings centers)

RATES OF PROFITS ON NATIONAL SAVING SCHEMES:

13.4 13.42 13.4

10.4 10.41 10.4

12.1 12.60 12.6

National Savings (Comparative analysis of banks and savings centers)

Pakistani banks provide cash services to individuals and companies, including

Current trends in Pakistans banking

Assets structure of banking system:

Market share by size of banks:

It is worth mentioning that, in order to meet the MCR, banking industry in

National Savings (Comparative analysis of banks and savings centers)

Official Interest/Discount rates in Pakistan (2006-2010)

National Savings (Comparative analysis of banks and savings centers)

WEIGHTED AVERAGE DEPOSIT RATES:

Unit 2013 2012

2009 2008 200 2006 200

National Savings (Comparative analysis of banks and savings centers)

2.55 1.30 1.42

TOTAL DEPOSITS OF SCHEDULED BAMKS (STOCKS):

1793, 2161, 2661,

2,999, 3,565, 3,801, 4325,

5,124, 5,874, 6,682,

SAVINGS mobilized BY NATIONAL SAVINGS SCHEMES:

National Savings (Comparative analysis of banks and savings centers)

-27,441.3 40,094.3 128,469.0 14,650.

-32,354.8 44,535.0 61,996.1

Source: central directorate of national savings

National Savings (Comparative analysis of banks and savings centers)

Increase in profit rates on CDNS products to hit banks deposit

Corporate sector entry in NSS to hurt

Banks deposits up Rs73b

The commercial banks showed an encouraging growth in their deposits during

sector in Pakistan. Commercial banks continued to depict growth in their

Return on NSS, bank deposits still negative: SBP

NSS portfolio crossed historic mark: CDNS

efforts of the organization besides rock solid trust of investors.

Copyright Associated Press of Pakistan, 2010

3 top banks lose Rs 13. 1b

National Savings portfolio doubles to Rs2000bn