KARACHI: The investment in premium prize bonds of Rs40,000 denomination has witnessed unprecedented growth of 157 percent after the government announcement to discontinue bearer prize bonds of same denomination.
According to official documents, the investment in premium prize bonds of Rs40,000 denomination surged by 157 percent to Rs15.86 billion by September 2019 as compared with Rs6.17 billion as of May 2019.
The government on June 24, 2019 announced to discontinue the circulation of Rs40,000 denomination bearer prize bond.
After the decision of the government people have surrendered Rs222 billion bearer bonds of Rs40,000 denomination by September 2019, which is around 86 percent of the total invested amount till May 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.
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 Rs2.317 trillion by September 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.