Pakistan raises profit rates on national savings schemes

Pakistan has raised profit rates on most national savings schemes by 100 to 220 basis points, effective May 26, in the first upward revision after the State Bank of Pakistan (SBP) increased interest rates in April.

A Finance Division notification issued on Monday said rates have been revised for eight savings instruments. The rates for Defence Savings Certificate (DSC) and the Behbood Savings Certificate along with its linked welfare schemes will remain unchanged.

Which rates have been revised?

The biggest increases went to the Special Savings Certificates (SSC) and Special Savings Account (SSA), both of which rose by 220 basis points for the first five half-year periods, from 9.40% to 11.60% per annum. The rate for the sixth and final half-year period on both instruments rose 200 basis points to 12.40%.

The Regular Income Certificate (RIC), which pays monthly profit and is among the most popular instruments for pensioners and fixed-income households, now yields an annualized 11.82% — up 186 basis points from 9.96% previously.

The Savings Bank Account rate rose 100 basis points to 10% per annum.

Profit rates on Sarwa Islamic savings products also rose, though the revision was slightly more moderate.

The Sarwa Islamic Savings Account (SISA) and the one-year Sarwa Islamic Term Account (SITA) both rose by 193 basis points to 10.93%. The five-year SITA increased 180 basis points to 11.16% from a previous rate of 9.36%.

Returns on Short-Term Savings Certificates (STSC) rose across all three tenors, with the largest gain on the 12-month certificate — up 165 basis points to an annualized equivalent of 11.23%. The three-month STSC rose 120 basis points to 10.84%, and the six-month rose 100 basis points to 10.58%.

What remains unchanged?

Two instruments were left out of the revision. The Behbood Savings Certificate, the Pensioners' Benefit Account, and the Shuhada Family Welfare Account — all linked schemes catering to senior citizens, retired government employees, and families of martyrs — remain at 12% per annum. The DSC rate also remains at 10.44%.

The government did not give a reason for excluding the two instruments. The Behbood and linked schemes, however, already offer the highest rate among all national savings products and sit above the revised rates for most other instruments.

Why are savings rates going up?

National savings profit rates in Pakistan broadly track the central bank's benchmark policy rate. When the SBP raises or cuts rates, the government eventually adjusts returns on savings instruments to keep them aligned with the broader interest rate environment.

The SBP raised its policy rate by 100 basis points to 11.5% on April 27 — the first rate hike since June 2023 — citing rising inflation and the economic fallout from escalating Middle East tensions. The move surprised most market analysts, who had expected the central bank to hold rates steady.

The rate hike quickly transmitted through financial markets. Treasury bill yields, which had been hovering around 9.5% to 10% in late January when the previous savings rate revision was made, climbed sharply in successive auctions. By May 20, yields across T-bill tenors ranged from 12.23% to 12.59% — well above the policy rate itself, reflecting strong investor expectations of sustained inflation pressure.

The revised national savings rates now bring returns closer to this elevated yield environment, offering retail investors — many of whom rely on these instruments for fixed monthly income — a meaningful pickup in returns.

What are national savings schemes?

National savings schemes are government-backed savings instruments issued through the Central Directorate of National Savings (CDNS). They are considered among the safest investment options in the country, as they carry a sovereign guarantee.

The schemes are widely used by retail investors, pensioners, widows, and low-to-middle income households who seek stable, predictable returns without exposure to market risk.