In a major bid to boost Islamic Finance, the
government is actively considering to transform the National
Savings Scheme (NSS) into Shariah mode of financing with an aim to help
depositors invest into Islamic Shariah-compliant Ijara sukuk. According to
informed sources, the pros and cons of the project is under review on its
specifics like the price of the retail Ijara sukuk, its size, duration,
maturity period and the mode of encashment during and at completion of the
maturity period. Since NSS is the biggest destination of deposits especiallyof the senior citizens, there are strong
indications that new scheme may open a flood gate of new
accounts attracting a largement segment of the society to enter into the
Islamic banking which is already catching up the conventional banking at a much
faster rate.
In the backdrop of government policy of spread the canvas of banking outreach to at least fifty percent of the population under financial inclusion program it expected that a huge number of unbanked population currently operating accounts in conventional banks and are receiving interest on their deposits may also join the Islamic mode of financing under NSS scheme because of their natural leaning towards Rizq e Halal. According to informed sources NSS collected deposits worth Rs232 billion from our savings schemes in financial year 2015-16 and a still larger amount of Rs337 billion in 2014-15.
The NSS management has recommended to the Ministry of Finance to extend Ijara sukuk to the NSS into for retail investors. It is also expected that this new scheme of Islamic financing is bound to increase cash inflows in to the government kitty which ultimately reduce the burden on the banking sector of the huge bank borrowing by the government to meet its financial and slippage of budgetary receipts. The government has issued a total of 18 domestic sukuks between 2008 and 2016, and collected a total of Rs669 billion.
But small investors could not invest in these issues because they were geared to investment, chiefly, by the commercial banks. In financial year 2015-16, two issues were launched bringing in Rs196.6 billion. NSS deposits by people totalled Rs233 billion in 2015-16 and Rs337 billion in 2014-15. In the event of introduction of Ijara sukuk in the NSS, some of these deposits are likely to be switched to this Islamic mode – Ijara sukuk.
In the backdrop of government policy of spread the canvas of banking outreach to at least fifty percent of the population under financial inclusion program it expected that a huge number of unbanked population currently operating accounts in conventional banks and are receiving interest on their deposits may also join the Islamic mode of financing under NSS scheme because of their natural leaning towards Rizq e Halal. According to informed sources NSS collected deposits worth Rs232 billion from our savings schemes in financial year 2015-16 and a still larger amount of Rs337 billion in 2014-15.
The NSS management has recommended to the Ministry of Finance to extend Ijara sukuk to the NSS into for retail investors. It is also expected that this new scheme of Islamic financing is bound to increase cash inflows in to the government kitty which ultimately reduce the burden on the banking sector of the huge bank borrowing by the government to meet its financial and slippage of budgetary receipts. The government has issued a total of 18 domestic sukuks between 2008 and 2016, and collected a total of Rs669 billion.
But small investors could not invest in these issues because they were geared to investment, chiefly, by the commercial banks. In financial year 2015-16, two issues were launched bringing in Rs196.6 billion. NSS deposits by people totalled Rs233 billion in 2015-16 and Rs337 billion in 2014-15. In the event of introduction of Ijara sukuk in the NSS, some of these deposits are likely to be switched to this Islamic mode – Ijara sukuk.
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