Investment in NSS triples in 1Q FY09

[Naveed Yaseen]

KARACHI: Investment in national savings schemes during the first quarter of the current fiscal year was almost thrice the amount invested in the same period of last financial year, official figures released on Monday reveal. According to official figures, the government managed to raise Rs 36.082 billion in July,

Rs 19.949 billion in August and Rs 6.883 billion in September through national savings instruments this year. Total government borrowing through national savings schemes during the quarter, thus, stood at Rs 62.914 billion. In the same quarter of the last year the government had raised Rs 20.692 billion. However, the monthly average of savings mobilized was lower at Rs 20.971 billion during the first quarter compared with Rs 22.268 billion average of 2008-09 when the directorate had mobilized Rs 267.223 billion. Impact on banks: For the first time in many yeras, banks have come under real pressure to give a fair deal to their depositors and enhance deposit rates. The banking system now faces stiff competition from national saving schemes.

Increase in NSS rates makes the saving schemes more attractive for individuals and those institutions that are allowed to invest in NSS. Few investment options: There is one other factor behind the rise in investment in national savings besides the rate hikes i.e. people have fewer investment options in the current economic situation. Also, there is no charm in currency market as the measures taken by the central bank recently have made the rupee rather stable. As a result, people have lost interest in buying dollars right now. Investment in commodities is not an option available to small investors because they lack storage capacity. Gold prices have been rising, but small investors stay away from the yellow metal because of extreme volatility in the bullion market. mushfiq ahmad

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