With reference to the comments published in daily Business Recorder on 16 April, 2010 under the title "NSS: nearly on target, but at what cost" it is clarified that: A) The NSS instruments are priced at 95 percent of Weighted Average Yield of benchmark PIBs of equivalent maturities, which is market determined. Budgeted funds are raised against the NSS in accordance with the GoP requirements.
B) The National Savings Bonds (NSBs) are launched under the government programme "Second Generation Capital Reforms". The initiative carried backing of donor agencies and confidence of Capital market, preliminary aimed at development of the debt securities market in the country. It was offered at only three branches of the National Savings and yielded the desired results. The successful trading at KSE is self evident of the response it received in the secondary market.
C) Over 90 percent of the NSS portfolio of PKR 1.6 trillion is composed of individual savings, which includes small savers who cannot afford themselves the costly bank services or the savings of the vulnerable segments of the society such as Pensioners/Senior Citizens/ Widows who do not want to expose their life long savings to capital market risks. Whereas the clientele of the banks avail themselves the services of financing/leasing etc which are otherwise not offered by NSS. Additionally, unlike the banks the NSS offers a uniform return to the investors irrespective of the nature or volume of deposit thus playing a key role to minimise the quite abnormal banking spread, which is depriving the common small savours. With the exception of pension funds no institution was allowed to invest in the NSB and only a selected category of institutions are allowed to invest in existing NSS which nullify the allegation of crowding out of the investment routed through other avenues.
D) The NSS remains the most cost effective, non-inflationary source of borrowing for GoP compared to all other available options. It is worth mentioning that the existing administrative cost on raising the debt through National Savings is mere 16 paisa per PKR 100.The NSS are available at every nuke and corner of the country through a nation wide network of 370 National Savings Centre (NSCs) and at over 6000 branches of Pak Post and scheduled banks under agency arrangements. The trust of millions of NSS investors with a wider network obviously carries the potential and depth to attract rural savings or savings outside the system,
The National Savings Organisation diversifies its investment schemes from time to time. Sharia compliant products or Zero Coupon bonds are under consideration and a decision shall be taken shortly. The organisation remains committed to serve its huge investor base of over six million at its best.-PR
Comments
Comments are closed.