Save more from National Bonds in 2012

National Bonds Corporation (NBC), the Shariah-compliant saving scheme, has registered a 17 per cent increase in sales till end-November 2011 compared to the same period last year and is planning to revamp its loyalty scheme next year, company CEO has revealed.

“So far, we have a 17 per cent sales growth compared to the same period last year. We have also witnessed an increase in our customer base from 607,000 to more than 650,000 customers this year, a growth of 7.18 per cent compared to last year,” Mohammed Qasim Al Ali, Chief Executive Officer, NBC, told 'Emirates24|7'.

Over 80 per cent of the sales made were repeat purchases, which the company believes highlights increased consciousness towards regular savings amongst the population.

“2012 will introduce the revamped loyalty scheme, which will be directly tied up with the savings culture of our bondholders,” Al Ali said.

Asked if there been an increase in Indian investors redeeming their bonds as the Rupee touched its lowest level recently, Al Ali admitted that there had been some increase in redemptions from Indian savers.

“There was some increase in redemptions from our Indian savers compared to the same period last year. However, we also witnessed an increase in bonds sales throughout the same period from Indian nationals overall. We have also seen some of the customers who redeemed earlier are reinvesting as other financial institutions are offering much less attractive returns.”

The rupee fell by 32 paise to trade at Rs 52.82 per dollar (Dh1 = Rs14.39) on Thursday morning. It reached a record low of 54.3050 on December 15. About 43 per cent of the company’s customers are Asians of which 61 per cent are Indians, 18.5 per cent are Pakistanis, 6 per cent from Bangladesh and the rest make up the remaining 14.5 per cent.
 
Loan on saving
 
Meanwhile, those saving with NBC are being offered 90 per cent of their savings as loan from Ajman Bank at a preferential profit rate, ranging between 3.7 per cent and 3.8 per cent as profit rate, 'Emirates24|7' can reveal. The repayment period is spread over 12 to 48 months and the loan is sanctioned within 48 hours. The investor has to pay one per cent processing fee.

Asked the reason for launch of the scheme, Al Ali said: “We have found that one of the main reasons people redeem their savings is their need for cash liquidity for financing, so we have worked with Ajman Bank to fulfill financing needs of our customers at preferential profit rates.”

Customers will still be entitled to annual profit plus the chances to win the weekly and monthly prizes. “… so the net gain for the bondholder is that he is fulfilling his financing needs at a much lower borrowing cost vs. the direct financing route currently available in the market.”

To a question on whether offering loans was driving their investors to take up debt, he stated people save to achieve goals in the future and borrow to achieve goals in the present. “Both tools are complementary and not contradictory. Our approach is to provide customers access to products that fulfill their objectives.

Furthermore, we offer a preferential financing rate through the tie up with strategic financial institutions, so once again we are helping them save money in situations where they would otherwise be eating into their savings,” Al Ali said.
 
Nakheel sukuk
 
Although Al Ali did not give a direct answer to whether NBC had bought Nakheel sukuk, he said: “We view such sukuks will be a good investment opportunity considering the high yields to maturity generated especially with the recent restructure and future plans for Nakheel.

In June, 'Emirates24|7' had reported that NBC, wholly owned by the Investment Corporation of Dubai, was in talks with trade creditors to buy the Nakheel sukuk.

Follow Emirates 24|7 on Google News.