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National Savings scam

A major fraud has been detected in the National Savings—a public sector corporation of Rs. 360 billion—in which insiders have reportedly siphoned off around Rs. 200 million, breaking the trust of more than seven million small-to-medium level individual savers who selflessly contribute in the economic development of the country. The fraud came to light at the time maturity of 10 years certificates of individuals at Lahore branch. The officials of this organisation had diverted more than Rs.110 million to bank accounts of their own and their family members, and were in the process of withdrawing another hefty amount of Rs. 100 million.

“This is perhaps the biggest ever fraud in the institution,” said Nadeem Iqbal, Director Human Resources of Central Directorate of National Savings (CDNS), adding not more than three cases of fraud had been reported over the past 15-16 years. Director General CDNS, Dr. Arshad Mahmood confirmed that a group of people, including an official of CDNS were found involved in the fraud by operating accounts to divest funds. He said most of the funds that were illegally withdrawn had been recovered, the case handed over to Federal Investigation Agency and audit of the entire record ordered to rule the possibility of contiguous fraud.

Quite a good number of saving certificate holders reside in foreign countries and visit Pakistan once in a year or within two years time. They put the savings from their hard earned money in the saving certificates of 10 years duration to get significant amount of profit with a view to use it whenever they face financial hardship. Such bad practices on the part of officials of a National Saving Center will lower the trust and confidence reposed in this organisation. It is pertinent to mention that a few months ago Directorate General of National Savings published front page advertisement in the leading national daily newspapers informing the individual savers about the maturity of their certificates to cash them along with the amount of profit accrued thereon.

The previous PML-N government of brute mercantile class slashed the profit rates on different National Saving Schemes by more than 40 percent which depressed the rate of national savings. The present government has raised twice the rate of profit on saving certificates. From mid 70s to the end of 80s the rate of profit on saving certificates of seven and 10 years maturity period was 22.5 percent which pushed up the national saving-to-GDP ratio to 18 percent. It was because of high rate of return on the national saving certificates that Pakistani Diaspora used to invest heavily in the national saving schemes. In the tenure of previous government the ratio of national saving to GDP dropped to 10 percent. The lowered rate of profit has already negatively impacted the national saving ratio and scam of diversion of funds to the tune of Rs. 210 million from a single branch will shatter the confidence of small and medium level saver which also include pensioners and senior citizens.

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