Federal Minister for Finance and Revenue, Ishaq Dar, launched the first-ever Shariah-compliant products under National Savings on Monday.
The Finance Minister launched Sarwa Islamic Products under Rafa National Savings (RNS) as per Shariah Principles based on the concept of Investment Agency and Musharakah.
While addressing the launch ceremony in Islamabad today, Dar said these products will answer the public’s demand for Shariah-compliant investing. He said these offerings will be in the form of 1-year, 3-year, and 5-year term accounts with monthly, semi-annual, and end-to-maturity profit distributions.
The products will be available from July 1st, said the Finance Minister.
Dar added that the government remains committed to implementing an interest-free Islamic financial system.
The Finance Minister further expressed the resolve and commitment of the government to promote Islamic finance and establish an interest-free system in Pakistan within a timeframe of 5 years. He also informed the participants that the Government has also constituted a high-level Steering Committee for this purpose, headed by Governor State Bank and being personally supervised by the Finance Minister himself. The committee is mandated to ensure a smooth transition to a Shariah-Compliant economy.
In the end, the Finance Minister commended the Finance Division and National Savings teams for this achievement, as this launch would mark the Shariah Compliant Retail Products at the Government level for the first time in Pakistan.
The new Islamic offerings under the Central Directorate of National Savings (CDNS) will be offered via RNS, which is responsible for providing Shariah-compliant investment accounts under “Sarwa Islamic Savings Account Rules, 2019.
RNS has launched Shariah-compliant Sarwa Islamic Savings Account (SISA) and Sarwa Islamic Term Account (SITA). Term Account Schemes will comprise four different tenures of one (1) year, three (3) years, five (5) years, and ten (10) years. In this phase, CDNS is offering SITA-3 years and SITA-5 years only. All policy-related matters/rules pertaining to this scheme shall be referred to RNS, CDNS.
The products have the following rates on profit as per Sarwa Islamic Savings Account Rules:
Product Description Profit Rate Payment Procedure
Sarwa Islamic Term Account (SITA) Tenor: 1 year 20.8% Profit Payment at Maturity
Sarwa Islamic Term Account (SITA) Tenor: 3 years 18% Bi-annual Profit Payment
Sarwa Islamic Term Account (SITA) Tenor: 5 years 12.84% Monthly Profit Payment
Sarwa Islamic Saving Account (SISA) Withdrawal of capital at any time 19.5% Monthly Profit Payment
SITA – 1, 3, 5 Years
The minimum investment amount is Rs. 50,000. Profit would be paid as per anticipated profit rates based on investment amounts and paid at maturity (for 1 year SITA), half-yearly (for 3 years SITA), or monthly (for 5 years SITA).
SISA
This is the Shariah-compliant alternative to the regular savings account of CDNS. The minimum investment amount of SISA is Rs. 100 and profit is calculated on the daily closing balance of the account, paid on a monthly basis.
Ahmed Ali Siddiqui, Director at IBA, Center of Excellence in Islamic Banking told ProPakistani that the launch of the Islamic product at National Savings has been long seeking demand of the general masses, which will attract huge investment in the future. The step is a major milestone toward the transition from an interest-based economy to an Islamic economy.
“These Sharia-compliant investment and saving products will attract a significant number of new savers and investors to the institute but investors having their deposits parked in conventional products will switch their investment in the newly announced products. The government should also utilize the depositors’ money wisely transforming it into an investment vehicle to generate lucrative earnings from Sukuk and other options,” he added.
This is the first time National Savings has introduced Shariah Compliant products, demonstrating its commitment to transforming the entire banking sector to a usury-free model.
Source: Pro Pakistani