Karachi, December 20, 2023 – Pakistan has implemented substantial cuts to the interest rates on saving schemes, despite maintaining a higher benchmark policy rate.
According to the latest data released by the Central Directorate of National Savings (CDNS), the profit rates on various saving schemes have been sharply reduced by up to 160 basis points.
The report from Topline Securities reveals that the current rate of the special saving certificate stands at 16.40 percent as of December 2023, down from the previous rate of 18 percent amended on October 30, 2023. This marks a reduction of 160 basis points and reflects the government’s effort to align interest rates with prevailing economic conditions.
Furthermore, the rate of short-term saving certificates has been cut by 92 basis points, bringing it down to 20.80 percent from the previous rate of 21.72 percent. Similarly, the profit rate on regular income certificates has witnessed a decline of 96 basis points, now standing at 15.12 percent, down from the previous rate of 16.08 percent.
In addition, a reduction of 24 basis points has been implemented, bringing the profit rate to 16.08 percent for schemes including the Pensioners Benefit Account, Behbood Saving Certificate, and Shuhda Family Welfare Account.
It’s noteworthy that despite these substantial cuts in interest rates on saving schemes, the State Bank of Pakistan (SBP) announced on December 12, 2023, that it would maintain the policy rate at a higher side, standing at 22 percent. This decision by the SBP indicates a cautious approach to monetary policy, possibly in response to economic challenges and inflationary pressures.
Financial experts and analysts believe that the reduction in profit rates on saving schemes could lead investors to explore alternative avenues such as banking deposits. The move is likely to impact individuals who rely on saving schemes for relatively higher returns, potentially redirecting their investments toward other financial instruments.
While the government’s decision to lower interest rates on saving schemes may be seen as a measure to control inflation and stimulate economic growth, it also raises concerns about the impact on savers and retirees who rely on these schemes for steady income. The move may prompt a shift in investment strategies, with investors reassessing their portfolios to adapt to the changing interest rate landscape.
As the economic landscape evolves, investors and savers will closely monitor these developments, adjusting their financial strategies accordingly to navigate the changing dynamics of Pakistan’s financial markets.
