Karachi, March 11, 2024 – Pakistan has witnessed a substantial decline of 12 percent in investment in saving certificates during February 2024, compared to the same month a year ago, according to official statistics released by the State Bank of Pakistan (SBP).
As of the end of February 2024, the total investment in certificates issued by the Central Directorate of National Savings (CDNS) stood at Rs 2.07 trillion, marking a notable decrease from the Rs 2.35 trillion recorded in February 2023.
The primary contributor to this decline was the sharp reduction in the value of certificates issued by saving centers, which dropped to Rs 1.99 trillion by the end of February 2024, down from Rs 2.25 trillion in the same month the previous year. Additionally, the other component of saving certificates issued by commercial banks also experienced a decrease, falling to Rs 79.78 billion by the end of February 2024, compared to Rs 95.50 billion a year ago.
Financial market experts have attributed this decline in saving certificate investments to the higher interest rates maintained by the State Bank of Pakistan (SBP). The competitive rates offered by the banking system have reportedly lured individuals to redirect their savings away from traditional saving certificates.
Furthermore, analysts have suggested that the government’s ongoing campaign against black money has played a role in discouraging investments in bearer certificates. With a heightened focus on transparency and financial accountability, investors may be opting for more conventional and regulated avenues for safeguarding their funds.
The State Bank of Pakistan’s decision to maintain higher interest rates has been a key factor influencing the shift in savings patterns. The allure of attractive returns in the banking system, coupled with the perceived safety and ease of access, has prompted investors to reconsider their preferences in favor of conventional banking instruments.
Moreover, the government’s commitment to curbing black money and promoting financial transparency has led to increased scrutiny and regulation in various financial instruments. While this initiative is commendable for fostering a more transparent financial landscape, it has inadvertently contributed to the decline in investment in bearer certificates.
The Central Directorate of National Savings (CDNS) may need to reassess its strategies and consider adjustments to make saving certificates more competitive and appealing to investors. This could involve revisiting interest rates, enhancing marketing efforts, and introducing features that align with the changing preferences of savers.
The 12% decline in investment in saving certificates in Pakistan reflects a broader trend of shifting savings patterns influenced by both economic policies and governmental initiatives. As the financial landscape continues to evolve, it becomes crucial for financial institutions to adapt and offer products that cater to the changing needs and preferences of investors.
