CDNS target reduced to Rs 37 billion

The Central Directorate of National Savings (CDNS) has set the target of Rs 37 billion for the current fiscal year 2011-12, which is around Rs 3 billion less than the investment target achieved during last fiscal year. Sources in the CDNS told this scribe here on Friday that the main reason behind comparatively lower target of investment made through prize bonds during the current fiscal year is the institutional investment ban.
"The government has decided to launch a new prize bond, worth Rs 25000, and it is likely to be brought forward for sale in coming December". Prize Bonds are bearer type of security available in the denominations of Rs 200, Rs 750, Rs 1,500, Rs 7,500, Rs 15,000 and Rs 40,000. These bonds are issued in series. Each series consists of one less than 1,000,000 bonds. No fixed return is paid, but prize draws are held on quarterly basis.
National Saving Scheme (NSS) has decided to reduce the discount rate on new investment schemes from October 1. The discount rate on 3-year long schemes has been reduced from 13.33 percent per annum to 12.5 percent per annum, while on 5-year long saving schemes has been reduced from 13.44 percent to 12.6 percent per annum.
Also, the discount rate has been reduced from 13.5 percent per annum to 12.68 percent for the Defence Saving Certificates, while under Behbud scheme, being invested by pensioners and over 60 years old investors the discount rate has also been reduced from 15.36 percent to 14.4 percent per annum.
Sources told Business Recorder that the overall investment made on saving schemes would not be affected at all by the decision of reducing the profit rates. "The main reason behind the reduction of profit rates is the decision of the State Bank taken on August 1 according to which the discount rate was reduced from 14 percent to 13.5 percent. Also, the discount rate of NSS is directly proportional to PID and the Treasury Bills. So, whenever the discount rate on Pakistan Investment Bonds (PID) is reduced, our rates have to be reduced as well. In the light of the decision made by the central bank, CDNS had to reduce its discount rate to avoid distortions in the domestic financial market", sources added.