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Tag: National Savings

  • Pakistan increases profit rates for saving accounts

    Pakistan increases profit rates for saving accounts

    Pakistan has increased profit rates for saving accounts to 13.50 per cent per annum from 12.25 per cent.

    The Central Directorate of National Savings (CDNS), the authority to manage the saving schemes in Pakistan, has announced the increase in profit rates on various schemes.

    READ MORE: Pakistan hikes key policy rate by 125 basis points to 15%

    According to Arif Habib Limited, the authority announced the increase in profit rates for two schemes.

    The profit rate of savings accounts has been increased by 125 basis points to 13.50 per cent from 12.25 per cent

    Similarly, the profit rate has been increased for regular income certificates by 24 basis points to 12.60 per cent from 12.36 per cent.

    However, profit rates for other schemes are remained unchanged. The profit rates for the other scheme are: Defence Saving Certificate at 12.40 per cent; Behbood Saving Certificate at 14.16 per cent; Special Saving Certificates at 13 per cent; and Pensioner Benefit Account at 14.16 per cent.

    READ MORE: Pakistan may see further 100bps hike in policy rate

    The increase in profit rates of saving schemes have been announced after the key policy rate was hiked to 15 per cent.

    On July 7, 2022, the State Bank of Pakistan (SBP) announced to increase the policy rate by 125 basis points to 15 per cent.

    This combined action continues the monetary tightening underway since last September, which is aimed at ensuring a soft landing of the economy amid an exceptionally challenging and uncertain global environment. It should help cool economic activity, prevent a de-anchoring of inflation expectations and provide support to the Rupee in the wake of multi-year high inflation and record imports.

    However, several adverse developments have overshadowed this positive news. Globally, inflation is at multi-decade highs in most countries and central banks are responding aggressively, leading to depreciation pressure on most emerging market currencies.

    READ MORE: SBP increases interest rate by 150bps to 13.75%

    “This strong monetary tightening has occurred despite concerns about a slowdown in global growth and even recession risks, highlighting the primacy that central banks are placing on containing inflation at this juncture,” the SBP said.

    Domestically, as energy subsidies were reversed, both headline and core inflation increased significantly in June, rising to a 14-year high. Inflation expectations of consumers and businesses also rose markedly.

    At the same time, the current account deficit unexpectedly spiked in May and the trade deficit continued its post-March widening trend to reach a 7-month high in June, on burgeoning energy imports. As a result, FX reserves and the Rupee remained under pressure, further worsening the inflation outlook, the central bank added.

    READ MORE: Policy rate may rise as T-Bill yields increase sharply

  • Prize bonds (bearer) to become worthless after Sept 30

    Prize bonds (bearer) to become worthless after Sept 30

    Bearer prize bonds of major denominations including Rs40,000/-, Rs25,000/- and Rs15,000/- will become worthless after September 30, 2021 if no date extension announcement comes from the government.

    The last date for encashment or exchanging the bearer prize bonds with denominations of Rs40,000/-, Rs25,000/- and Rs15,000 is September 30, 2021, which was already extended from May 31, 2021.

    In order to comply with the Financial Action Task Force (FATF) for the prevention of money laundering and terror financing, the government had decided to document the financial instruments by the withdrawal of bearer prize bonds.

    So far the government has decided to withdraw prize bonds of four denominations including Rs40,000/-, Rs25,000/-, Rs15,000 and Rs7,500. However, the last date for exchanging Rs7,500 denomination bearer prize bonds is December 31, 2021.

    The government started withdrawal of bearer prize bonds with Rs40,000 denomination on June 24, 2019. Later, on December 10, 2020, the government announced to discontinue the circulation of Rs25,000 denomination prize bonds. In April 2021, the finance ministry announced that national prize bonds of denominations Rs7,500 and Rs15,000 shall not be sold.

    It is likely the finance ministry extend the date for encashment / exchanging the bearer prize bonds beyond September 30, 2021. However, the decision in this regard has not been taken so far.

    The finance ministry has issued the following procedure for encashment/exchanging the bearer prize bonds.

    01. Conversion to Premium Prize Bonds (Registered): The bonds can be converted to premium prize bonds (registered) of denomination of Rs25,000/- and Rs40,000/- (subject to the adjustment of differential amount) through 16 field offices of State Bank of Pakistan (SBP)’s Banking Services Corporation, and branches of six commercial banks i.e. National Bank of Pakistan, Habib Bank Limited, United Bank Limited, MCB Bank Limited, Allied Bank Limited and Bank Alfalah Limited.

    02. Replacement with Special Saving Certificates (SSC) / Defence Saving Certificates (DSC): The bonds can be replaced with SSC/DSC through the 16 field offices of SBP Banking Services Corporation, authorized commercial banks and National Savings Centers.

    03. Encashment at Face Value: The bonds will only be encashed by transferring the proceeds to the bond holder’s bank account through the 16 field offices of SBP Banking Services Corporation as well as the authorized commercial bank branches and to the Saving Accounts at National Saving Centers.

    Prize Bonds (Bearer) not to be encashed after Sept 30
  • Applications invited for post of DG National Savings

    Applications invited for post of DG National Savings

    ISLAMABAD: The ministry of finance on Sunday invited applications for the post of Director General, Central Directorate of National Savings, Islamabad.

    The ministry said that prescribed qualification, experience, age limit and other terms of contract appointment under Management Position Scales Policy, 2020 (MP-I) scale are given as under:

    Qualification: Master degree in any of the disciplines: economics, statistics, commerce, accounting, finance, business administration, cost and management accountants, chartered accountants, or equivalent from an HEC recognized University / institutions.

    Experience: At least 18 years experience in the banking/ financial sector or in finance related positions in the public sector.

    Age Limit: minimum age 50 years; maximum age 62 years

    Period of Appointment: Three years extendable for further two years contingent upon result based performance.

    Place of Posting: Islamabad

    Termination of Contract: On one month’s notice on either side or payment of one month’s pay in lieu thereof.

    Pay Package: The pay package will be based on MP-I Scale and other incentives as per those admissible to officers in MP-I scale.

    The ministry said that interested applicants should submit applications through courier service alongwith their CVs and copies of testimonials duly verified by institutes and recent photographs within 15 days of the publication of the advertisement for above mentioned position.

    Only short listed candidates will be called for interview. The candidate must be citizen of Pakistan.

  • Investors redeem Rs115 billion against suspended Rs25,000 prize bonds

    Investors redeem Rs115 billion against suspended Rs25,000 prize bonds

    ISLAMABAD: Investors have redeemed/enchased to the tune of Rs115 billion against bearer prize bonds of Rs25,000 denomination which were suspended by the government in December 2020.

    According to state media on Tuesday, the Central Directorate of National Savings (CDNS) had paid encashment of Rs 115 billion by February 28 to the investors against the suspension of prize bonds of Rs 25,000.

    An official of the CDNS quoted as saying that around Rs 115 billion had been paid to the customers during last three months and remaining 45 billion out of total Rs 160 billion would also be paid by May 30, 2021.

    On December 10, the State Bank of Pakistan (SBP) issued following instructions to the president and CEOs of all commercial banks regarding option to replace / encash the bonds:

    i. The Bonds can be converted to Rs. 25,000/-denomination Premium Prize Bonds (Registered) through the 16 field offices of SBP Banking Services Corporation, and branches of six authorized commercial banks i.e. National Bank of Pakistan, Habib Bank Limited, United Bank Limited, MCB Bank Limited, Allied Bank Limited and Bank Alfalah Limited.

    ii. The authorized commercial banks shall also issue Rs. 25,000/-denomination Premium Prize Bonds (Registered)as per the prescribed procedure, with immediate effect. Stock of the same has already been delivered to authorized commercial banks.

    iii. The bondholder shall be required to submit a written request for conversion of bearer bonds to Rs. 25,000/-Premium Prize Bonds (Registered) on the prescribed application form.

    iv. The bondholder shall also be required to submit prescribed application forms for registration / purchase of Premium Prize Bonds as per the procedure in vogue.

    Replacement with Special Savings Certificate (SSC) / Defence Savings Certificate (DSC)

    i. The Bonds can be replaced with SSC / DSC through the 16 field offices of SBP Banking Services Corporation, authorized commercial banks and National Savings Centers.

    ii. All authorized commercial banks shall, therefore, accept requests for replacement of bearer bonds with SSC or DSC on the prescribed application form.

    iii. The bondholder shall also be required to submit application form for purchase of SSC / DSC (SC-1) as per the prescribed procedure

    Encashment at Face Value

    i. The Bonds will only be encashed by transferring the proceeds to the bond holder`s bank account through the 16 field offices of SBP Banking Services Corporation, at authorized commercial bank branches and to the Savings Accounts at National Savings Centres.

    ii. All commercial banks shall receive requests for encashment of bearer bonds on the prescribed application form.

    A copy of the application form (Annexure A), duly signed and stamped, shall be provided to the bondholder as an acknowledgement receipt.

    Moreover, the prize bonds encashed / replaced by the general public may be surrendered to the concerned SBP BSC office through the respective regional office of the commercial bank.

    The government has already canceled prize bonds of Rs 40,000 and CDNS repaid to the investors the encashment worth of Rs 258 billion in 2019-20.

  • KCCI expresses concerns over sudden stoppage of National Saving payments

    KCCI expresses concerns over sudden stoppage of National Saving payments

    KARACHI: Karachi Chamber of Commerce and Industry (KCCI) on Saturday expressed deep concerns over sudden stoppage of payments by National Saving Centers (NSCs) and urged the government take immediate action in this regard.

    KCCI President Shariq Vohra in a statement, while expressing deep concerns over the sudden stoppage of payments by NSCs, urged the government to look into this serious issue as any delay in these payments would intensify the hardships mostly for the senior citizens including retired individuals and widows whose lives depend on timely payments.

    The President KCCI pointed out that KCCI has received numerous complaints as the returns of many individuals against their investments in NSC certificates have been put on hold without a valid reason and they all were extremely worried about it.

    “It is a well-known fact that these payments belong mostly to senior citizens and widows whose lifetime savings are invested in certificates so that they could utilize the monthly returns on their daily bread and butter. Hence, it is really unfair to stop such critically and economically important payment,” he added.

    He said that on one hand, the Federal Ombudsman has directed the Pakistan Post to digitize all Post Offices by February 2021 to avoid delay in payment of profits against saving certificates issued to senior citizens and widows but on the other hand, this important segment remains deprived as their request for release of outstanding payment has been turned down.

    He stressed that in order to facilitate the senior citizens, the National Saving Center has to be completely digitalized and its operations should be improved as per banking standards while the profits payable should instantly be transferred into the personal accounts of its account holders, which would be widely welcomed as the senior citizens will not be required to visit saving centers every month to claim their dues and they will be able to access their profits online.

    President KCCI requested the Ministry of Finance and the State Bank of Pakistan to issue directives for immediate release of payments to the masses so that their lives were not disturbed.

  • National Savings tightens checks on investors

    National Savings tightens checks on investors

    ISLAMABAD: The government has tightened monitoring of investors of national savings to comply with conditions of Financial Action Task Force (FATF) and prevent transactions related to money laundering and terror financing.

    The Central Directorate of National Savings (CDNS) has prepared a comprehensive plan to examine the customers and issued instructions to all its regional offices in the country.

    The plan has been prepared by the National Savings (AML&CFT) Supervisory Board in consultation with the Financial Monitoring Unit (FMU).

    Under the plan the offices of the national savings have been advised to follow the guidelines in examining and monitoring the customs of the saving certificates and prize bonds.

    All those customers will be examined where overall investment quantum, account balance or transactional activity is not in line with their businesses, known means or stated purpose of products.

    The authorities issued red flags for transactional patterns related to all products, including certificates, accounts and prize bonds.

    Following are the red flags to identify suspicious transactions:

    ·         Nominee is not a close relative or change in nominee (for instance, to include non-family members).

    ·         Third party check is provided for investment.

    ·         Purchase of a long-term investment product followed shortly thereafter by a request to liquidate the position to get back the invested amount.

    ·         Overall investment quantum, account balance or transactional activity is not in line with the customer’s business, known means or stated purpose of the product.

    ·         Client is frequently purchasing savings certificates / prize bonds through unusual payments in cash which do not commensurate with his/her profile.

    ·         Unusually high levels of investments or unusually large transactions in relation to what might reasonably be expected of clients with a similar profile.

    ·         When transactions are conducted without any apparent legitimate or economic reason.

    ·         Where multiple deposits are made by unrelated individuals.

    ·         Large cash is deposited followed by early withdrawal.

    ·         Where large deposits and withdrawals are made routinely, and the end of day balance is very low or nil.

    ·         When a customer insists to buy multiple savings certificates/prize bonds through structured/broken cash transactions to avoid CTR reporting threshold (PKR 2.0 Million and above).

    ·         Two or more customers (Linked/associated with each other) working together to break one cash transaction into two or more transactions to evade the CTR reporting requirement.

    ·         Purchase of higher denomination Prize Bonds against cash without providing any plausible justification.

    ·         Encashment of higher denomination Prize Bonds without any plausible justification.

    ·         When a customer is frequently converting one product into another (especially in the name of an unrelated third party) without any plausible justification.

    ·         Numerous prizes are repeatedly/very frequently being claimed by the customer against winning prize bonds during a short span of time.

  • National Savings: Rules notified for identification of customers, beneficial owners

    National Savings: Rules notified for identification of customers, beneficial owners

    ISLAMABAD: National Savings (AML and CFT) Supervisory Board for National Savings Schemes has issued SRO 956(I)/2020 for identification and verification of customers, beneficial owners of saving schemes.

    According to the SRO regulations shall be called the National Savings (AML and CFT) Regulations, 2020.

    The chapter III of the regulations explained the identification and verification of customers and beneficial owners.

    Identification and verification.- (1) Central Directorate of National Savings (CDNS) shall –

    (a) conduct CDD in the circumstances and matters set out in subsection

    (1) of section 7A of AML Act; and

    (b) for the purposes of conducting CDD as required under sub-section

    (2) of section 7A of the AML Act in the circumstances set out under sub-section (1) of the said section 7A comply with sub-regulations (2) to (18) of regulation 4.

    (2) CDNS shall –

    (a) identify the customer; and

    (b) verify the identity of that customer using reliable and independent documents, data or information as set out in sub-regulation (9) of regulation 4.

    (3) Where the customer is represented by an authorized agent or representative, CDNS shall –

    (a) identify every person who acts on behalf of the customer;

    (b) verify the identity of such person by using reliable and independent documents, data or information as set out in sub-regulation (9) of regulation 4; and

    (c) verify the authority of the person who is acting on behalf of the customer.

    (4) CDNS shall also identify the beneficial owner and take reasonable measures to verify the identity of the beneficial owner by using reliable and independent documents, data or sources of information as set out in regulation (9) of regulation 4, such that CDNS is satisfied that it knows who the beneficial owner is.

    (5) For customers that are legal persons or legal arrangements, CDNS shall understand the nature of such customer’s business and its ownership and control structure.

    (6) For customers that are legal persons or legal arrangements, CDNS shall identify the customer and verify its identity by obtaining the following information, in addition to the information required in sub-regulation (9) of regulation 4, namely:

    (a) name, legal status and proof of existence;

    (b) the powers that regulate and bind the legal person or arrangement, as well as the names of the relevant persons having a senior management position in the legal person or arrangement; and

    (c) the address of the registered office and, if different, a principal place of business.

    (7) For customers that are legal persons, CDNS shall identify and take reasonable measures to verify the identity of beneficial owners by –

    (a) identifying the natural person, if any, who ultimately has a direct or indirect controlling ownership interest, as defined under relevant laws, in a legal person; and

    (b) to the extent that there is doubt under clause (a), as to whether the person with the controlling ownership interest is the beneficial owner or where no natural person exerts control through ownership interests, the identity of the natural person, if any, exercising control of the legal person or arrangement through other means; and

    (c) where no natural person is identified under clause (a) or clause (b), the identity of the relevant natural persons who hold the position of senior managing official.

    (8) For customers that are legal arrangements, CDNS shall identify and take reasonable measures to verify the identity of beneficial owners as follows, namely:-

    (a) for trusts, the identity of the settlor, the trustee, the protector, if any, the beneficiaries or class of beneficiaries, and any other natural persons exercising ultimate effective control over the trust, including through a chain of control or ownership;

    (b) for waqfs and other types of legal arrangements, the identity of persons in equivalent or similar positions as specified in clause (a); and

    (c) where any of the persons specified in clause (a) or (b) is a legal person or arrangement, the identity of the beneficial owner of that legal person or arrangement shall be identified.

    (9) For the purposes of verification of identity of customers or beneficial owners in sub-regulations (2) to (8), reliable and independent document, data or sources of information includes –

    (a) For a natural person, a copy of:

    (i) Computerized National Identity Card (CNIC) issued by NADRA; or

    (ii) National Identity Card for Overseas Pakistanis (NICOP) or passport for non-residents or overseas Pakistanis or those who have dual nationality; or

    (iii) Pakistan Origin Card (POC) or passport for Pakistanis who have given up Pakistan nationality; or

    (iv) Form B or Juvenile card to children under 18 years of age; or

    (v) where the natural person is a foreign national, either an Alien Registration Card (ARC) or a passport having valid visa on it or any other proof of legal stay along with passport.

    (b) for a legal person, a certified copy of –

    (i) resolution of board of directors for opening of account specifying the persons authorized to open and operate the account (not applicable for single member company);

    (ii) memorandum of association;

    (iii) articles of association, wherever applicable;

    (iv) certificate of incorporation;

    (v) Securities and Exchange Commission of Pakistan (SECP) registered declaration for commencement of business as required under the Companies Act, 2017 (XIX of 2017), as applicable;

    (vi) list of directors required to be filed under the Companies Act, 2017 (XIX of 2017), as applicable;

    (vii) identity documents as per clause (a) of all the directors, beneficial owners and persons authorized to open and operate the account.

    (viii) any other documents as deemed necessary including its annual accounts and financial statements or disclosures in any form which may help to ascertain the detail of its activities, sources and usage of funds in order to assess the risk profile of the prospective customer.

    (c) for a legal arrangement, certified copies of –

    (i) the instrument creating the legal arrangement;

    (ii) registration documents and certificates;

    (iii) the legal arrangement’s by-laws, rules and regulations;

    (iv) documentation authorizing any persons to open and operate the account;

    (v) identity document as per clause (a) of sub-regulation (9) of the authorized persons, beneficial owners and of the members of governing body, board of trustees or executive committee, if it is ultimate governing body, of the legal arrangement; and

    (vi) any other documents as deemed necessary including its annual accounts and financial statements or disclosures in any form which may help to ascertain the subject of the trust, the detail of its activities, sources and usage of funds in order to assess the risk profile of the prospective customer.

    (d) In respect of government institutions and entities not covered above, –

    (i) CNICs of the authorized persons; and

    (ii) letter of authorization from the concerned authority.

    (10) CDNS shall verify the identity of the customer and beneficial owner before or during the course of establishing a business relationship or conducting occasional transactions.

    (11) CDNS may complete verification of the identity of the customer and the beneficial owner after the establishment of the business relationship, provided that –

    (a) this occurs as soon as reasonably practicable;

    (b) this is essential not to interrupt the normal conduct of business; and

    (c) the risks are proven to be low.

    (12) CDNS shall have and implement risk management procedures concerning the conditions under which a customer may utilize the business relationship prior to verification.

    (13) CDNS shall conduct ongoing due diligence on the business relationship, including –

    (a) scrutinizing transactions undertaken throughout the course of the relationship to ensure that the transactions being conducted are consistent with CDNS’s knowledge of the customer, their business and risk profile, including where necessary, the source of funds; and

    (b) undertaking reviews of existing records and ensuring that documents, data or information collected for the CDD purposes are kept up-to-date and relevant, particularly for higher risk categories of customers.

    (14) CDNS shall apply CDD requirements to existing customers on the basis of materiality and risk, and shall conduct ongoing due diligence on such existing relationships at appropriate times, taking into account whether and when CDD measures have previously been undertaken and the adequacy of the data and documents previously obtained.

    (15) CDNS shall apply the countermeasures sanctioned by the Federal Government, pursuant to recommendations by the National Executive Committee, when called upon to do so by the FATF.

    (16) CDNS shall apply EDD in the following circumstances, including but not limited to –

    (a) business relationships and transactions with natural persons or legal persons and legal arrangements when the ML and TF risks are higher;

    (b) business relationships and transactions with natural persons or legal persons and legal arrangements from countries for which this is called for by the FATF; and

    (c) PEPs and their close associates and family members.

    (17) EDD measures may include, but shall not be limited to, the following measures, namely:-

    (a) obtaining additional information on the customer (e.g. volume of assets, information available through public databases, internet, etc.), and updating more regularly the identification data of customer and beneficial owner;

    (b) obtaining additional information on the intended nature of the business relationship;

    (c) obtaining information on the source of funds or source of wealth of the customer;

    (d) obtaining information on the reasons for intended or performed transactions.

    (e) obtaining the approval of Senior Management to commence or continue the business relationship; and

    (f) conducting enhanced monitoring of the business relationship by increasing the number and timing of controls applied and selecting patterns of transactions that need further examination.

    (18) In relation to clause (c) of sub-regulation (16), CDNS shall –

    (a) implement appropriate risk management systems to determine if a customer or beneficial owner is a PEP or a close associate or family member of a PEP, both prior to establishing a business relationship or conducting a transaction, and on an on-going basis throughout the course of the business relationship;

    (b) at a minimum, apply the following EDD measures –

    (i) obtain approval from senior management to establish or continue a business relationship where the customer or a beneficial owner is a PEP, close associate or family member of a PEP or subsequently becomes a PEP, close associate and family member of a PEP;

    (ii) take reasonable measures to establish the source of wealth and the source of funds of customers and beneficial owners identified as a PEP, close associate or family member of a PEP; and

    (iii) conduct enhanced ongoing monitoring of business relations with the customer or beneficial owner identified as a PEP, close associate and family member of a PEP.

    (19) CDNS may allow the application of SDD only where lower risks have been identified through an adequate analysis through its own risk assessment and any other risk assessments publicly available or provided by Supervisory Board in accordance with subregulation (3) of regulation 3 and commensurate with the lower risk factors.

    (20) SDD measures may include but shall not be limited to –

    (a) verifying the identity of the customer and the beneficial owner after the establishment of the business relationship;

    (b) reducing the degree of on-going monitoring and scrutinizing transactions; and

    (c) not collecting specific information or carrying out specific measures to understand the purpose and intended nature of the business relationship but inferring the purpose and nature from the type of transactions or business relationship established.

  • Interest rates on saving certificates slashed up to 100 basis points

    Interest rates on saving certificates slashed up to 100 basis points

    ISLAMABAD: The profit rate on saving certificates have been reduced up to 100 basis points due to sharp cut in key policy rate by the State Bank of Pakistan (SBP). The new rate of return on national saving certificates are applicable from June 02, 2020.

    According to Central Directorate of National Savings (CDNS), the interest rate by one percent on the savings certificates investment due to lower rates of Pakistan Investment Bonds (PIB) applicable from June 02, 2020.

    “The CDNS interest rates are linked with the policy of Pakistan Investment Bonds (PIBs), set the SBP,” an official of CDNS told state-run media.

    The rate of return on ‘Behbood Savings Certificates’ (BSC) reduced from 10.32 to 9.84 percent and as similarly Pensioner Benefit Accounts (PBA) recorded downwards from 10.32 to 9.84 percent.

    The profit rates on ‘Shuhada Family Welfare Account’ also reduced from 10.32 to new rates of 9.84 percent applicable from June 02 of this year.

    The profit rates on ‘Defense Savings Certificates’ (DSC) was also reduced from 8.54 to 8.05 percent and interest rates on ‘Regular Income Certificates’ also downwards 8.28 to 7.44 percent according to the current market situation.

    The profit rates on Special Savings Certificates (Registered)/Accounts was also reduced on all three categories of certificates from 1-5 Profit 8.00 to 7.10 percent, 6th Profit 8.60 percent 7.40 percent and Average 8.10 to 7.15 percent by June 02, 2020.

    The Short Term Savings Certificates profit rates also reduced on different categories on months on month bases by 3- Months from 7.80 to 7.72 , on 6- Months certificates 7.50 to 7.36 percent and on 12-Months slightly increased from 6.95 to 7.30 percent.

    The profit rates on Savings Account (SA) has also been reduced from 7.00 to 6.50 percent decided by last meeting held in Ministry of Finance.

  • Biometric verification of all saving scheme investors to be conducted under FATF recommendations

    Biometric verification of all saving scheme investors to be conducted under FATF recommendations

    ISLAMABAD: The government will conduct biometric verification of all investors of National Saving Schemes in order to make compliance with recommendations of Financial Action Task Force (FATF), a statement issued by Finance Division said on Saturday.

    Asia Pacific Group in its recently published Mutual Evaluation Report (MER 2019), has pointed out number of deficiencies on the part of Central Directorate of National Savings (CDNS) in terms of compliance to FATF recommendations, which has negatively affected the overall grading of different recommendations specially the recommendation 10, 11, 12 and 15.

    In this context, CDNS is committed to mitigating the deficiency to improve customer service delivery and to comply the FATF recommendation to safeguard the interest of the investors, it said.

    Banks under the supervision of SBP have already put in place all the required systems and KYC processes to comply the FATF recommendation.

    Finance Division through promulgation of National Savings Schemes (AML-CFT) Rules, 2019 has decided to engage an AML-CFT compliant bank, through competitive bidding, to put in place the requirement as well as the necessary training of employees of Central Directorate of National Savings (CDNS).

    Accordingly, Expression of Interest, in consultation with SBP, has been sought from the interested bank to conduct KYC (Know Your Customer) and other requirement of new as well as existing client of CDNS.

    This will include the biometric verification and screening of potential clients in UN Proscribed Person List.

    All these screenings are meant to stop any ill-gotten money to become part of financial system and to safeguard the valued investor from the menace of Money Laundering and Terrorist Financing.

    Central Directorate of National Savings (CDNS) as it stands today is one of the longstanding institutions in the country with a legacy of more than 140 years.

    The institution has always been a symbol of unshakable trust of the public.

    National Savings is playing its pivotal role to inculcate the Culture of Savings, facilitate Financial Inclusion and extending Social Security Net to the deserving sections of the society.

    Around 33 percent of CDNS deposits are in Welfare Schemes which attribute around 2 percent incremental rate of profit over and above other regular savings schemes.

    Currently, CDNS manages portfolio of Rs. 4,038 billion (November 2019) of more than 7 million investors.

    National Savings Schemes (“NSS”) provide risk free and competitive avenue to all segments of society specially the most vulnerable i.e. senior citizens, pensioners, widows, physically challenged persons and family members of Shuhada.

    On the other hand, it provides a non-inflationary and cost effective borrowing to the government to bridge the overall fiscal deficit which ultimately reduces dependency on external borrowing.

    About 19 percent of domestic debt consists of NSS while these deposits are equal to 28 percent of total deposit of scheduled bank.

    One of the main challenges to CDNS was its manual operations and lack IT, therefore, CDNS has started its journey of automation in 2009 and successfully completed PSDP funded Automation Project Phase I & II in 2013 and 2017.

    Through these project 223 National Savings Centre (“NSC”) i.e. (60 percent out of total 376) have been successfully automated.

    Automation of remaining 153 is in active process with support of Department for International Development (DFID), UK.

    Meanwhile, CDNS has upgraded its core business solution from decentralized to centralized architecture.

    Around 144 branches have already been shifted to upgraded solution where customer transaction time has significantly reduced.

    Also, the provision of Alternate Delivery Channels (ATM) is in final stages which will further improve the service delivery. Introduction of technology has provided CDNS the opportunity to modernize its process which include swift data reporting, reconciliation with other departments, budgeting and forecasting, customer data base etc.

    Due to IT progress CDNS is now capable to implement number of initiatives which was not possible due to manual operation.

  • Law drafted to examine national saving schemes investments for money laundering, terror financing

    Law drafted to examine national saving schemes investments for money laundering, terror financing

    ISLAMABAD: The government has draft law to examine involvement of money laundering and terror financing in investment made in national saving schemes.

    The ministry of finance on Thursday issued draft rules namely National Saving Schemes (AML and CFT) Rules, 2019.

    Under the draft rules, the Central Directorate of National Savings (CDNS) would conduct customers due diligence (CDD) of all the customers / investors.

    “Every customer, whether permanent or occasional and whether natural or legal person or legal arrangement, shall be identified for establishing business relationship and for the purpose following information shall be obtained, verified using reliable, independent source documents, data or information and recorded namely: –

    (a) full name as per identity or registration documents;
    (b) national identity card, passport, national identity card for overseas pakistanis, Pakistan origin card or alien registration card number, etc.
    (c) registration or incorporation number of business, if applicable;

    (d) residential address, telephone numbers and e-mail, if available;

    (e) business address, telephone numbers and e-mail, if available;

    (f) date of birth;

    (g) date and place of registration or incorporation of business, if applicable;

    (h) nationality

    (i) place of birth;

    (j) national tax number (NTN), if applicable;

    (k) nature of business and location, if applicable;

    (l) sources of earnings;

    (m) customer’s net worth in respect of legal persons, legal arrangements and high risk customers; and

    (n) annual income

    The minimum set of documents to be obtained by the office of issue or third party in case of each category of customers shall be as follows:-

    (a) In respect of individuals, a photocopy of any one of the following valid identity documents namely:-

    (i) computerized national identity card (CNIC) issued by NADRA; or

    (ii) national identity card for overseas Pakistani (NICOP) issued by NADRA; or

    (iii) Pakistan origin card (POC) issued by NADRA; or

    (iv) alien registration card (ARC) issued by NADRA; or

    (v) passport having valid visa on it or any other proof of legal stay along with passport in respect of foreign national individuals only.

    (b) In respect of limited corporations and companies.-

    (i) certified copies of-

    (A) resolution of board of directors for opening of account specifying the persons authorized to open and operate the account (not applicable for single member company);

    (B) memorandum of association;

    (C) articles of association, wherever applicable;

    (D) certificate of incorporation;
    (E) Securities and Exchange Commission of Pakistan (SECP) registered declaration for commencement of business as required under the Companies Act, 2017 (XIX of 2017); and

    (F) list of directors required to be filed under the Companies Act, 2017 (XIX of 2017), as applicable;

    (ii). photocopies of identity documents as per sub-clause (b) of all the ` directors and persons authorized to open and operate the account;

    (c) In respect of trust clubs, societies and associations, etc.-

    (i) Certified copies of-

    (A) certificate of registration or instrument of trust; and

    (B) by-laws, rules and regulations;

    (ii) resolution of the governing body, board of trustees or executive committee, if it is ultimate governing body, for opening of account authorizing the person to operate the account;

    (iii). photocopy of identity document as per sub-clause (i) of clause (c) of the following:

    (A) authorized persons;

    (B) members of governing body, board of trustees or executive committee, if it is ultimate governing body; and

    (C) settlor, the trustees, the protector if any, the beneficiaries or class of beneficiaries

    (d) In respect of NGOs, NPOs and charities,-

    (i) certified copies of –

    (A) registration documents and certificates; and

    (B) by-laws, rules and regulations;

    (ii) resolution of the governing body, board of trustees or executive committee, if it is ultimate governing body, for opening of account authorizing the persons to operate the account;

    (iii) photocopy of identity document as per sub clause (i) of clause (d) above of the authorized persons and of the members of governing body, board of trustees or executive committee, if it is ultimate governing body; and

    (iv) any other documents as deemed necessary including its annual accounts and financial statements or disclosures in any form which may help to ascertain the detail of its activities, sources and usage of funds in order to assess the risk profile of the prospective customer;

    (e) In respect of minor accounts,-

    (i) photocopy of Form-B or birth certificate of the minor; and

    (ii) photocopy of identity document as per sub-clause (i) above of the guardian of the minor;

    (f) In respect of government institutions and entities not covered herein above.-

    (i) CNICs of the authorized persons; and

    (ii) letter of authorization from the concerned authority.

    the office of issue or third party shall verify identity documents of the customers from relevant authorities and bodies, including through NADRA’s verification system or biometric identification system and, where necessary, use other reliable, independent sources and retain copies of all reference documents used for identification and verification.
    The office of issue or third party shall be responsible for verification of the identity documents and the customer shall neither be obligated nor the cost of verification be charged to the customer.

    Where the customer is represented by an authorized agent or representative, or where customer is a legal person, the Office of issue or third party shall identify the natural persons who act on behalf of the customer and verify the identity of such persons and the authority of such natural persons shall be verified through documentary evidence, including specimen signature of the persons so authorized.

    Where beneficial owner is different from the customer, the office of issue or third party shall identify and take reasonable measures to verify identity of the beneficial owners using relevant information or data obtained from a reliable source, to the satisfaction of the office of issue.

    The verification of the identity of customers and beneficial owners, if any, shall be completed before business relations are established.

    The office of issue shall conduct ongoing due diligence on the business relationship, including;-

    (a) scrutinizing transactions undertaken throughout the course of that relationship to ensure that the transactions being conducted are consistent with the office of issue’s knowledge of the customer, their business and risk profile, including where necessary, the source of funds; and

    (b) ensuring that documents, data or information collected under the CDD process is kept up-to-date and relevant, by undertaking reviews of existing records, particularly for higher risk categories of customers.

    The office of issue or third party shall maintain a list of all such customers and accounts where the business relationship needed to be closed on account of negative verification that includes all type of customer identity verification such as NADRA, UNSCR or any other document or information etc.