KARACHI: People have documented an amount of Rs233 billion invested in bearer prize bonds of Rs40,000 denominations following the government announcement of discontinuation.
According to statistics of Central Directorate of National Savings (CDNS) people have Rs323 billion bearer bonds of Rs40,000 denomination by October 2019, which is around 90 percent of the total invested amount till May 2019.
The government on June 24, 2019 announced to discontinue the circulation of Rs40,000 denomination national prize bonds in initial phase.
The investment in prize bonds of Rs40,000 denominations reached to record level of Rs258.72 billion by May 2019.
However, since announcement the stock of bearer prize bonds was gradually falling and reduced to only Rs26.15 billion by October 2019.
The State Bank of Pakistan (SBP) following the announcement issued procedure for the banks to facilitate general public in exchanging the unregistered prize bonds through three different modes.
The SBP has barred the exchange of bearer prize bonds against cash.
However, it can be redeemed against registered or premium prize bonds or can be converted into national saving schemes or face value (direct transfer to the bank account of bond bolder).
The bearer instruments have been known as parking lot for undocumented economy. Therefore, the government launched registered prize bonds of Rs40,000 denomination in March 2017 which could be purchased against certain requirements including Computerized National Identity Card (CNIC) and valid bank account.
Following the ban on bearer prize bonds and its conversion through option of known documented manner, the investment in premium prize bonds of Rs40,000 denomination jumped up to Rs17 billion by October 2019 as compared with Rs6.17 billion as of May 2019, showing an increase of 175 percent.
According to the SBP the bearer instrument can also be exchanged in savings schemes such as Special Saving Certificates (SSC) or Defence Saving Certificates (DSC).
The total investment into the saving certificates increased to Rs2.4 trillion by October 2019 as compared with Rs2.2 trillion by May 2019.
The government is intended to transform all the bearer prize bonds into to registered securities. In this regard the Central Directorate of National Savings in collaboration with SBP is planning to issue scripless registered prize bonds amongst all denominations with objective to document the economy.
