Director General, Central Directorate of National Savings (CDNS), Mr Zafar M. Shaikh says that his organization is currently engaged in making innovative efforts to promote saving culture in the country. He said the current saving ratio of 13.5% was still below the standard mark. In an exclusive interview with Pakistan Observer, the Director General, CDNS said that his organization offers attractive saving products to various categories of people to suit their specific needs. “Our products are quite popular with the people who trust our organization and prefer to put their savings with it”, he added.

He said we are also engaged in restructuring of the CDNS to better cater for the needs of the people and introduce more profitable products. Some new products are under the consideration of Finance Ministry. Our focus is on introducing short term saving certificates and expansion of CDNS network not only across the country but also to overseas Pakistanis.

To a question, DG CDNS said Economic Coordination Committee banned institutional savings in our organization because of concern that institutional buying may retard the growth process. This decision led to a revised Rs.186 billion target from the earlier target of Rs.223 billion. The current target is Rs.188 billion. However investments by individual funds like pension, gratuity, superannuation, contributory provident fund and trusts remain unaffected.

He was asked if CDNS had any issues with FBR, DG CDNS said, there are none. He pointed out that his organization was regularly deducting withholding tax on profit earned through various saving schemes. The deducted amount is duly deposited in the national treasury. However withholding tax is not deducted on those schemes which are exempted from income tax under the income tax laws.

To a question about new products to be launched by CDNS, Mr. Shaikh said, two important schemes are in the pipeline for the current fiscal year. The Ministry of Finance is considering issuance of three types of short term saving certificates. The objective is to encourage small savers who can afford to deposit their money for short periods of time like 3, 6 or 12 months. He said CDNS is also considering expanding the National Savings network to non-resident Pakistanis who will be able to invest online in any scheme of National Savings through CDNS website. The rates of return will be the same as offered to resident Pakistanis. This scheme would enable the non-resident Pakistanis to invest their savings in their own country.

When asked about National Savings Bonds trading, he said currently three stock exchanges are engaged in such trading but it would be further promoted.

Of restructuring of CDNS, the Director General said some six months ago the Cabinet agreed to convert this organization into an autonomous corporation. When converted into an autonomous corporation, the organization would be able to take decisions quickly without falling prey to red tape. The proposed National Savings Corporation will be headed by Secretary of Finance as Chairman. The other members of the corporation would be from public as well as private sector.

Regarding government barrowings from CDNS, the Director General said the government does not want to fuel inflationary trends by relying too much on banks and also barrows from CDNS. When asked about CDNS performance, Mr. Zafar M. Shaikh said CDNS mobilized around Rs.800 billion during the past three years and its estimated portfolio is now Rs.1880 billion. CDNS achieved this high mark with limited resources. The number of clients has crossed six million mark. The National Savings offices have been renovated and there are plans to make use of modern IT to streamline working of the organization and ensure convenience of the clients. “We are computerizing all branches of National Savings but it will depend on availability of funds”, he concluded.

Profile:

His career spans over two decades of international banking with primary emphasis on treasury and fund management. For the last eight months he has been working as CEO of CDNS, a network of 370 branches with total portfolio of Rs.1880 billion.

During his assignment with State Bank of Pakistan, he managed to achieve ideal trinity of low interest rates, stable exchange rates and comfortable foreign exchange reserves. He achieved milestone in historic build up of foreign exchange reserves/stability in exchange rate, played pivotal role in establishment of Reserve management and risk management departments, selection of fund managers and their benchmark performance criteria. His current assignment coupled with his past experience has enabled him to structure, design and market various types of treasury related products.