The federal government has slashed the rate of return on most national savings schemes, including profit rates from Sharia-compliant financial instruments. According to reports, however, regular savings accounts are excluded from the rate cut, with the profit rate sitting at 9.5 percent.

 

Details from reports suggest that Islamabad’s decision to cut profit rates on other instruments is in line with a general reduction in the rate of interest in the recent past. Previously, the State Bank of Pakistan (SBP) had hiked up interest rates to combat rampant inflation. This caused interest rates to surge to a staggering 22 percent, attracting many to park their funds in banks. 

 

However, interest rates have remained locked in a freefall since June 2024, when interest rates sat at 22 percent, dropping by 1,100 basis points (bps). This caused Islamabad to revise rates on national savings schemes.

 

It merits a mention that details of the new rates were passed out via agents and internal channels instead of an official notification. Reports suggest that the Central Directorate of National Savings is the entity responsible for publishing and announcing new rates.

 

The rate of return on Regular Income Certificates has fallen to just 11.16 percent after falling by 36bps. Previously, the return on these certificates stood at a respectable 11.52 percent.

 

Shuhada Family Welfare and Pensioners Benefit Accounts each witnessed a 24bps cut, with the rate of return declining to 13.2 percent. Behbood Savings Certificates also underwent the same cut in their yield rate.

 

Data from reports suggests that the rate of return on Defence Savings Certifi­cates also recorded a decline, falling from 11.91 percent to 11.76 percent. Special Savings Certificates and accounts will now yield the holder a return of only 10.6 percent after logging a decline of 30bps in their rate of return.

 

Individuals holding Sharia-compliant instruments will witness the largest drop in their income inflows as the rate of return on Sarwa Islamic Saving Account (SISA) and Sarwa Islamic Term Account (SITA) fell from 10.34 percent to just 9.75 percent.

 

The revised rates of return took effect on June 27 2025, before fiscal year (FY) 2025-26 started. Analysts believe that with a decline in returns from national savings schemes, investors might seek other opportunities with a higher rate of return. This could result in a large inflow of funds into the domestic capital market, the Pakistan Stock Exchange (PSX).