CDNS begins procedural work to introduce Islamic finance

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Looking at the growing appetite for shariah-compliant finance, Central Directorate of National Savings (CDNS) has decided to start Islamic finance for which it would begin procedural work next month to provide the facility in the institution.

In this regard, under Islamic shariah-compliance, prize bonds and savings certificates would be issued for investment in accordance with shariah principles, a senior official of the CDNS told APP.

The CDNS would provide Islamic investment opportunities to its consumers in an institution like the rest of the private and public sector banking, where Islamic shariah business has now reached 20 percent.

Replying to a question, the official said the CDNS collected Rs850 billion fresh deposits in the last seven months of the current fiscal year 2021-22 from July 1 to March 31.

In fiscal year 2020-21, the CDNS annual collection target was Rs250 billion compared to Rs352 billion in 2019-20 and Rs350 billion in 2018-19 to enhance savings in the country, the official said.

“CDNS has started working to increase new investment opportunities and promote digital investment through many new projects,” he shared. The directorate in collaboration with the State Bank of Pakistan (SBP), was also developing digital price bonds, which would be available through online electronic channels. The CDNS was also in the midst of launching its first mobile app for online purchase and encashment of National Savings Schemes.

“The official said that for better and efficient transfer of funds electronically, the CDNS is going to adopt RAAST in the current month of January for speedy flow of funds through its financial tributaries,” he said.

Initially, the CDNS has opened three separate accounts in SBP to avoid/stop direct access to the Non-Food Account-1 for its Alternative Delivery Channel (ADC) operations, 1Link Payment, UPI Payment and RAAST payment. The Finance Division would allocate budgetary ceiling on a daily basis and the CDNS would operate within the allocated funds limit.

Accordingly, the PFM Act, 2019 was adopted in its true spirit for the alternative delivery channels of CDNS.

He informed that the CDNS interest rates were linked with the Pakistan Investment Bonds (PIB) policy set by the SBP. “CDNS had opened new avenues for public and private investment to document the country’s economy and ensure transparency in the financial system.” National Savings received an increased investment of Rs80 billion by June 30, 2021, from the newly registered premium prize bond of Rs40,000 and Rs25000. During 2020-21, investors withdrew Rs300 billion after the suspension of the said bond.

New registered premium prize bonds of Rs40,000 and Rs25,000 were registered by the SBP and cashed only by the registered financial institutions under the SBP, he added.—APP

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