Govt slashes profit rates on savings, again

ISLAMABAD: With immediate effect, the government on Wednesday slashed profit rates on all, but two, national savings instruments including those in the so-called Sharia-compliant papers. The returns on two savings instruments that were kept unchanged at 20.5 per cent for now included a conventional savings account and a Sarwa Islamic Savings Account (SISA). The reduction in returns has come about following a minor decline in cut-off yields on government papers (T-bills etc) in the previous auction in anticipation of a possible cut in the central bank’s policy rate going forward that currently stood at 22pc. This is the third cut in the yields on savings in about two months, i.e. since Dec 19, 2023. According to notifications issued by the Ministry of Finance, the rate of return on Special Savings Certificates (SSC) and accounts has been reduced by 40 basis points to 15.6pc from 16pc for the first five years. This means the saver would now get Rs7,800 per six months on Rs100,000 from Rs8,000 as of Feb 20. This has been slashed by a cumulative 80bps from 16.04pc last month. The rate for the sixth year has been kept unchanged at 16.6pc which was cut by 80bps from 17.4pc on Jan 26.