National Savings


An interview with Mr. Zafar Sheikh, Director General National Savings

Tell us about your professional background?

I started my career with the banking sector of  Dubai. I worked as a wealth manager with several banks in Dubai, London and New York. After coming back to Pakistan in 2001, I was asked to handle the issue of depleting Foreign Exchange Reserves. In 2003-04, we took the reserves to 14 Billion Dollars and also prepaid the loans to Asian Development Bank. In 2005, I was shifted to the debt house by the Government. We managed to get WAPDA out of crises and also introduced sukuk bonds to save WAPDA from the financial crunch. I joined National Savings in 2007.


Please describe the operations of National Savings.

In economics, a country’s national savings is the sum of its private and public savings. It is generally equal to a nation’s income minus consumption and government purchases. National Savings of Pakistan is an organization from where people can purchase differnet bonds and certificates by investing safely and getting profits with a certain percentage. It is like a bank deposit which gives some return at the end of the year.


To run the country, the Government has to borrow money to maintain the cash flow for its expenses. It has 3 options to borrow money; commercial banks, state bank and National Savings. We meet government’s commited by surpassing all of our targets. Within 3 years, we managed 70% growth in the total portfolio of Pakistan National Savings. The government is interested in promoting the non-bank borrowing. We are trying to reduce the banking spread which is very high in our country. We are also giving special rates to some members of the society like widows. For the Government, our cost is the cheapest.


Banking   SpreadThe bank spread is the difference between the   bank’s cost of funds, in terms of interest paid to depositors, and the rate   the bank charges to debtors on bank loans.


Who are the beneficiaries of National Savings?

The difference between a commercial bank and National Savings is that if yon open an account of Rs. 1000 or even Rs. 1 billion, you will get the same rate of return unlike other banks.  Another unique thing of National Savings is that there are no hidden charges. We are supporting the common man by offering a rate which a billionaire is also getting.  No bank offers this kind of rate. 90% of or portfolio goes to the small and middle class saver of Pakistan. During the past 3 years, our number of clients has crossed 6 million.


How have you revolutionized the National Savings organization?

We have changed the mindset of our employees from the grass root level. We have made them realize that they are not only government servants but also public servants. We visited all of our branches with this message for our employees. Similarly, we have given a message to the public that in National Savings their money is safe and the rate is competitive.


Can you please tell us about the current major schemes and projects?

We plan to re-launch Income Exchange Bond very soon. In addition, there are two other important schemes in the pipeline. First, we are introducing Short Term Saving Certificates which will encourage small savers who can only afford to deposit their money for few months like 3, 6 or 12 months.  We will also offer them short term rate of return. The minimum required amount for this scheme is only Rs. 10,000.


The second plan is a state of the art scheme. In the first quarter of 2011, we will give a gift to NRPs (Non resident Pakistanis) which will enable them to invest online in any scheme of National Savings through our website and the rates will remain same. NRPs who are investing in any other bank get approximately 40 basis point or 1 percent whereas we intend to offer 12% to 13%. There is an exchange risk but the rate of return is very high and most importantly they will be investing in their own country.


I also want to open a head quarter of National Savings in Peshawar to serve the people of Khyber Pakhtunkhwa. There will be a Record Center in the city which will create 700 to 800 job vacancies for the people of Khyber Pakhtunkhwa. I want to transform National Savings into an autonomous government corporation.


What is your opinion about the current Interest Rates?

When I was in State Bank, we always tried to lower the interest rates so that the government borrowing cost can be reduced as well as a small borrower can be attracted.


From a financial perspective, how can we improve the current economic situation?

To improve the current economic situation, we need to improve ourselves. We have ample resources to fulfill any kind of requirement of our country.


What has been the most memorable experience in your professional life?

In 1976, a Pakistani went to Dubai to establish a new bank. I, as a young team member worked very hard with the entire team for the establishment of this bank in the Middle Eastern market. We also introduced a branch of this bank in the European and American market. It was the Middle East Bank. I acted as the head of its foreign exchange department. That was one of the best experiences of my professional career.


In 2001, there used to be two exchange rates: official and unofficial which created a gap of more than 4 Rupees per dollar. We were successful in reducing that gap to zero. Our remittances have increased manifolds because of this particular step of removing the dollar value gap between the official and unofficial rates. I consider this as my greatest achievement.


What message would you like to give to local and international investors?

I, as an investment banker, foreign exchange banker, central banker, commercial banker and as head of National Savings can guarantee that Pakistan is the right place to invest as it has immense potential for growth.


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