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February 19, 2021

Investment in premium prize bonds rises 29pc to Rs22.8bln

Business

February 19, 2021

KARACHI: Total investment in registered or premium prize bonds surged 29 percent to Rs22.8 billion during the last year as investors were seen offloading investments from unregistered instruments amid their ban, official statistics revealed on Thursday.

The sale of premium prize bonds of both denominations of Rs40,000 and Rs25,000 stood at Rs17.71 billion by the end of 2019.

On December, 2020, the finance ministry decided to stop the circulation of bearer prize bonds of Rs25,000 and the cutoff date for exchanging was set May 31 this year.

The ministry notified to discontinue the bearer or unregistered bonds of Rs40,000 on June 24, 2019. The bearer bonds of Rs40,000 was to be completely discontinued for legal tender by March 2020. However, the date was extended up to December 30, 2021.

The investment in premium prize bonds of Rs40,000 denomination increased to Rs21 billion by December 2020 compared with Rs17.7 billion a year ago. However, in the very first month of discontinuation of Rs25,000 denomination bearer prize bonds, an amount of Rs1.7 billion was invested in premium bonds of same denomination.

However, after the ban on prize bonds the investors surrendered around Rs47 billion in bearer prize bonds of Rs25,000 denomination during the month.

The stock of bearer bonds of Rs40,000 has been reduced to Rs1.8 billion by December 30, 2020 as compared with the stock of Rs14.6 billion a year ago.

The government launched the premium prize bonds of high denominations to encourage documentation of the economy. Further, the bonds are available against valid CNIC and at fixed profit rates besides prize money.

The investment in premium prize bonds remained attractive as the government announced to withdraw same denomination unregistered prize bonds, which is part to eliminate all unregistered debt securities to ensure verified source of income and comply with the requirement of the Financial Action Task Force.

The ministry of finance in early January last year issued rules ‘National Saving Schemes (AML and CFT) Rules, 2019’ to curb money used for terror financing and money laundering.

Under these rules, the authority is to collect all information of persons investing in saving schemes. The information shall include name, address, CNIC, passport etc. Further, the investors either existing or new investors shall require to provide a source of money related to the invested amount.