National Savings Schemes Facing Scandal for “Biggest Fraud”

National Savings to Introduce System of Biometric Verification

Islamabad: National Savings, a public sector organisation, is currently facing allegations of major fraud. Insiders report embezzlement of about Rs 200 million, as well as a breach of trust of more than 7 million savers.


The fraud reportedly came to light at the maturity of 10-year saving certificates of individuals at a Lahore branch. It is believed that the officials were involved in diverting the funds, approximately Rs. 110 million, to personal bank accounts as well as those of close family members. Sources claim, that the officials were in the process of withdrawing another Rs. 100 million or so when the fraud was uncovered

Officials at Lahore branch diverted certificate holders’ funds to bank accounts of their own.

Arshad Mahmood CDNS Director General

Director Human Resources of the Central Directorate of National Savings (CDNS), Nadeem Iqbal stated, “this is perhaps the biggest-ever fraud in the institution.”

The Director added that not more than there cases of fraud had been reported against the institution in the last two decades.

Arshad Mahmood, the CDNS Director General, is believed to have confirmed that a group of people, including an official of the CDNS, were involved in the siphoning by operating accounts in an “organized manner” to divert funds.

He further claimed that most of the illegally withdrawn funds have so far been recovered, the case handed over to the FIA [Federal Investigation Agency] and a special audit of the record ordered to rule out possibility of “contagious fraud”.

It was initially reported as a case of missing documents, insiders claim. It was reported that about 1,200 SC-1 forms [used for the purchase of saving certificates] of the Special Savings Certificates and Regular Income Certificates were missing.

Serious irregularities regarding the computerized working were observed during checking. While checking the manual records of blank certificates (NS-8) vis-a-vis that were maintained in the system, it was observed that the data maintained in the system varied from the manual statements.

At the same time, remedial measures like strengthening of systems and automation are in process to avoid a repeat in future because the National Savings is generally not prone to crime or corruption, but customers mostly belonging to poor and lower middle class could be subjected to fraud for their innocence.

Official, CDNS

Khaleeq Kiani of Dawn News, gives an example, “manual NS-8 being maintained by the organisation was showing consumption of 71 pieces of Regular Income Certificates of Rs1m denomination whereas the system was showing consumption of 74 pieces of the same in July, 2017. When the difference was looked into, it was observed that in the system, three pieces of same denomination were being shown issued to a different registration number and their status was changed through data manipulation as “encashed”. This situation was not being reflected in the hard copy of the record.”

Other certificates are also believed to be different on SC-1 forms as well as in the system. Serial numbers of the Regular Income Certificates that were available in the system have also been observed to be duplicates. Upon further investigation of the fraud, it was understood that such a ‘tempering’ of records could only be possible by someone who had direct access to the database.

Sources claim that an unauthorized official of grade-14 had been appointed in place of a grade-17 post at the Defence branch of the National Savings.

His position had been misused by seniors, claim insiders. They added that there was no proper handover of charge for almost a year due to which some back-dated entries had been made.

Naeem Iqbal, Director Human Resources CDNS, denied the claims however, continuing that the suspect was well qualified to lead the branch. He continued that the officials involved either directly or even remotely with the issue have been side-lined and are being probed.

A branch officer and his wife, who is also a government officer, are believed to have gotten away with Rs. 50 million. They were initially found to have withdrawn Rs. 20 million against maturity of certificates of unsuspecting individuals but, it was later confirmed that they had embezzled about Rs. 50 million by the evening when they were confronted with evidence.

A bigger scam was uncovered during the internal investigation [to carry out the recovery process] when the CDNS had an FIR registered and involved the FIA respectively, as well as freezing another Rs. 50 million yet in the process of withdrawal against schemes.

The suspects are believed to have siphoned roughly more than Rs. 104 million of which about Rs. 90.43 million has already been recovered by the FIA during investigation, an official claimed.

Director Human Resources CDNS, further claimed that an official of the branch was under arrest, while another official of grade-18 had been transferred and two others of grade-17 and many of grade-11 had been side-lined and are being charge-sheeted for criminal negligence, connivance or fraud.

The investigation is currently under progress but, prima facie the fraud could have been avoided if all these officials performed their duties.

Naeem Iqbal Director Human Resources, CDNS

He further stated that the CDNS management had ordered reconciliation of the manual as well as automated record of accounts and funds across the country. All National Savings branches have been advised to reconcile their accounts on a daily basis with a warning that a lapse would be taken seriously.

To prevent further incidents of fraud, there will be an issuance of check to customers based on “computerized identity card numbers” nationwide. Approximately 222 branches out of a total 376 branches across the country will be automated during the current year to ensure a biometric verification of the National Savings customers.