KARACHI - In consequence of 150 basis points hike in discount rates, the federal government is expected to revise NSS profit rates by 100-150 bps in the new budget to attract investors, The Nation learnt on Thursday.   It is important to note here that the NSS rates are normally revised bi-annually in line with PIB yields (the long-term debt instrument) therefore, the NSS products are anticipated to provide better returns since they are likely to be benchmarked with T-bills which is offering current yield of 10.0-10.3%, better than 7-12% time deposit rates offered by banks. Due to high return rates, the huge amount of capital might shift from equity market to bond market, capital bazaar sources said.    According to reports, CDNS (Central Directorate of National Savings) has decided to launch 3-months, 6-months and 1- year papers, the details of which could be announced in upcoming budget. Sector sources said, in contrast, upward revision in NSS rates and/or launch of new short term savings schemes could result in a shift of deposits from low cost current and savings accounts to these papers. This is despite SBP' setting minimum deposit rates on savings account to 5%, sources added. The new NSS schemes are set to compete with the commercial banks' deposit growth likely to approximate 10 percent by the end of 2008. The impact of National Saving Schemes on banks would be neutral since banks in Pakistan are used for transactional and safety purposes, said research analyst from JS Capital, analyzing the most probable outcome of the said schemes on banking sector. He further said there is a segment of depositors who avoid interest due to religious reasons therefore; NSS instruments do not offer same level of flexibility and service quality as offered by banks to their depositors. In meanwhile, JS Research in its report titled 'Pre-Budget 2008-09'maintainted 'Overweight' stance on the banking sector, which is trading at attractive multiples with profits expected to grow by 13% and 20% in 2008 and 2009, even after incorporating 5% minimum profit rate on savings and KIBOR adjustments. Advances growth on other hand, despite slow down in consumer lending and high interest rates, is likely to remain at 10%, sustaining mainly due to demand from ongoing projects. A package to promote agriculture & SMEs (Small & Medium Enterprise) sectors, in addition to set a significantly higher borrowing target by government owing to the persistent pressures on fiscal front, are the highlights of the report which considering as expected budgetary measures to be taken in upcoming budget. Report said, while significant discount rate hike of 150bps by SBP would be good for banks in the short run as KIBOR linked advances would yield higher returns. However, it has long run ramifications for the overall lending appetite of the sector which could witness a growth slow down to 8% in 2009 as against 10% expected in 2008. Consistent with prior year, tax on cash withdrawal is unlikely to have any major effect while, measures for agriculture & SME, on the other hand, will boost banks' lending, appraised report. Report said, the imposition of 0.2% withholding tax on cash withdrawal of Rs25,000 or more is likely to be increased to 0.3% in budget FY08-09 as government searches for additional revenue sources without no changes on corporate tax front though, as current tax rate has already been rationalized, with other sectors. Growth of agriculture sector is estimated at a paltry 1.8% against a target of 4.8% set for FY08 due to lower than target crop size also the budget FY08-09 would add emphasis on the agriculture sector especially in light of the soaring food prices & supply shortages. In FY08, borrowing target of Rs130bn was set by the government against which as of Apr 28, 2008 Rs335b (approx. 3 times the target) has already been borrowed.