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Thursday March 28, 2024

Govt issues sterling, euro denominated NPCs

By Our Correspondent
February 20, 2021

KARACHI: The government has introduced Euro and British Pound denominated conventional Naya Pakistan Certificates (NPCs) in an effort to attract more inflows from Pakistani diaspora.

The State Bank of Pakistan on Friday said the government has notified that the NPCs would also be issued in Pound Sterling (GBP) and Euro in maturities, carrying gross rate of return (before deduction of tax). The central bank issued standard operating procedures to invest in the pound and euro NPCs. The investors would be eligible to make minimum investment of euro 5,000 in three-month, six-month, 12-month, three-year and five-year tenors of Pound and Euro denominated certificates.

The SBP said the certificates in GBP would offer 5.25 percent to 6.50 percent returns on different tenors. The yields on the euro-denominated certificates would be 4.75 percent-5.75 percent.

“The 3-month, 6-month and 12-month tenor certificates shall be single-coupon securities on which principal and profit shall be paid on maturity or on premature encashment whereas, 3-year and 5-year certificates shall be coupon securities, on which periodic profit payment shall be paid on half-yearly basis,” the SBP said. “The procedure for investment in Certificates, periodic coupon payment, pre-mature encashment and redemption at maturity as notified vide above referred Circular, shall also apply to the NPCs denominated in GBP and Euro.” Bankers saw the investment in NPCs in the euro and pound currencies as a welcome development for the overseas Pakistanis in Europe and the UK. NPCs are attracting significant interest from both conventional and Islamic NPCs. Overseas Pakistanis have invested more than $300 million in NPCs in five months.

“NRPs have invested $168 million in conventional NPCs so far, while investments in Shariah-compliant version of NPCs have reached $147 million,” said a banker. In terms of accounts opening and funds received under Roshan Digital Accounts, four countries Saudi Arabia, United Arab Emirates, United States of America and the UK have dominated so far, the banker said. Total 87,833 Roshan digital bank accounts (RDAs) have been opened from 97 countries around the world. The remittances through RDA have crossed $500 million in five months. The tax regime around RDA has been streamlined to allow the tax paid at source on profits on investments in NPC, shares, mutual funds, and property to be full and final and thus Overseas Pakistanis will not be required to file any tax return. With the help of some correspondent banks, the cost of transferring funds internationally to and from RDA accounts has been reduced considerably to between $5 and $9 for most transactions. In response to demand from Overseas Pakistanis in Europe and the UK, the government has now introduced NPCs in Euro and British Pound, in addition to the existing US and Rupee-denominated certificates. Overseas Pakistanis have been fully integrated with Pakistan’s banking and payments system in a completely digital manner and have access to a full suite of lifestyle banking products. The RDA is available for both conventional and Islamic banking customers around the world.