close
Thursday March 28, 2024

CDNS expects to raise around $1 billion: Two financial institutions express interest in OPSCs

By Danyal Haris
May 02, 2018

KARACHI: Two financial institutions have shown interest to invest in Overseas Pakistanis Savings Certificates (OPSCs), a product from which the Central Directorate of National Savings (CDNS) expects to raise around $1 billion.

Sources said the financial institutes have a presence in Pakistan, and the names would be disclosed within a week. The closing date to submit the bids was April 30, 2018.

CDNS Director General Zafar Masud speaking to The News on Tuesday said, “Overseas Pakistanis can buy certificates with a small amount of $1,000. Certificates will be scrip-less and offered in both dollars and rupees.”

The financial expert said the rate of return was likely to fall in between six and seven percent, and the CDNS would launch the certificates before the close of this fiscal year. “Initially, the certificates will be launched in the Gulf Cooperation Council market and later in other countries in phases,” he added.

The savings certificate would be the best option for overseas Pakistanis due to the higher returns as compared to the rate offered by international, as well as domestic banks.

“There is a great potential and expected investment from expatriates within the first year may raise $500 million to $1 billion,” the DG said, adding that CDNS recognises overseas Pakistanis as a powerful resource for the national development and has designed the unique product to target the savings, coming from informal channels.

“We are on target and (are) likely to complete the assessment of financial bids received from highly reputed international and local financial institutions within the stipulated timeframe,” he added.

The proposed tenor would be three- and five-year with quarterly/semi-annual profit payments. “National Savings had already appointed a consortium of EY (Ernst and Young), Haidermota and Company and Al Tamimi and Company as their financial and legal advisers for the structuring of the proposed certificates,” Masud said.

CDNS is a premier financial institution, offering retail government securities and savings products (known as national savings scheme), on a level playing field to small savers through diversified product mix.

The institution has investor base of seven million and portfolio, which is around 30 percent of the total banking deposits of nearly Rs12 trillion. Its share in the domestic debt of government is around 19 percent. Most of its products are designed for low-income segments of the society. The country received $14.6 billion in remittances from overseas Pakistanis in the first nine months of the current fiscal year, marginally up four percent over the corresponding period a year earlier.

The inflows from informal channels of Hundi and Hawala still form a large chunk despite the government’s remittance initiatives to give tax and exchange rate benefits to encourage remittances through banking channels.