Rules unveiled to lure foreign investment in national savings

ISLAMABAD: The government has unveiled new rules for overseas Pakistanis to invest in national savings schemes as needs of resources are increasing due to the coronavirus tumult, it was learnt on Friday.

Overseas Pakistani savings bills rules, 2020 came into effect at once to let expatriates invest in national savings certificates through bank accounts on repatriable basis in terms of Foreign Exchange Regulation Act, 1947.

Overseas Pakistanis with identity cards, members of overseas Pakistanis foundation, and an employee or official of the federal or provincial government who are eligible to open foreign currency account might individually or jointly purchase the bill, an official document said.

“In case of a minor, the parents or the legal guardian shall operate all transactions on behalf of the minor until the age of eighteen years at which time the minor should meet the criteria,” said the document. “In case a bill purchased jointly, both joint-holders of the bill shall be required to meet the eligibility criteria set out in these rules.” The funds for investment in certificates must be remitted from abroad as per prevailing regulations and processes. Funds remitted in the non-resident foreign currency accounts of the investor after the 15th of April, 2020 might be used for investment in the bills.

The Central Directorate of National Savings (CDNS) was tasked to mobilise Rs352 billion in savings during the current fiscal year, as opposed to the actual collection of Rs410 billion in the last fiscal year. In the first seven months, the directorate managed to collect Rs116 billion. The rate cut is believed to dent the revenue collection in the remaining months of FY2020.

The government took various structural and policy adjustments for stability and sustainable inclusive growth. Current account deficit started to shrink and for the first time primary balance posted surplus of Rs104 billion in the July-March FY2020 (0.2 percent of GDP), compared to deficit of Rs474 billion (1.2 percent of GDP) during the same period last year. But, the pandemic has brought multiple challenges for Pakistan’s economy. Prior to coronavirus, the GDP growth was estimated at 3.24 percent for 2019/20. Now, it is expected to fall significantly.

The bills would be issued through selected commercial banks to be selected by CDNS in consultation with the central bank.

“CDNS shall issue or allocate inventory of scrip-less bill to agent banks for issuance to their foreign currency account holders,” said the document. “The agent banks shall keep the bill inventory so received by CDNS in the CDNS securities account to be opened with them and shall make arrangements to update CDNS about the usage of the inventory and its reconciliation with CDNS. The agent banks shall also open investment portfolio securities accounts of the account holders purchasing the Bill and credit the bill in the IPS accounts.”