National Savings - provider of social security to the vulnerable section of society.

AuthorNisar, Ahsan

Byline: Ahsan Nisar

Over a period of time, particularly in the last decade, National Savings has transformed itself from a retail debt raising arm and the source of infrastructure funding of the government into a formidable vehicle for financial inclusion, particularly women, and a provider of social security to the vulnerable sections of the society. Pakistan has one of the lowest saving rates in the region which has direct relationship with the economic growth rates. Whilst National Savings, as an institution, contributes less than 1% towards the GDP and around 10% in the Domestic Savings to GDP Ratio of 7.5%; however, there's substantial room for improvement on these ratios over a period of time.

The strength of the product bouquet of National Savings is such that it provides an inherent balancing act - when the demand for one product is down, the other becomes more attractive - e.g., in the low interest rate environment, traditional products of National Savings take a beating; whilst demand for prize bonds move up as the appetite of the investors to take a chance on the prizes, and to forego the fixed return on their investments, goes up. The social welfare products of National Savings remain largely insensitive to the interest rates. The fact is that there are a very large number of investors of National Savings who live off, and meet their ends through the monthly return on their investments in these...

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