The prize bond holders of Rs25,000 denomination have so far encashed/redeemed around Rs80 billion after the government announced to stop the circulation of the paper in December 2020, official statistics revealed on Monday.
The closing stock of prize bond holders of Rs25,000 denomination was around Rs21 billion by the end of April 2021, compared with the stock of Rs101 billion in December 2020.
On December 10, 2020, the State Bank of Pakistan had issued a notification to withdraw the circulation of Rs25,000 denomination national prize bonds.
According to the notification, the national prize bonds of Rs25,000 denomination would not be sold with immediate effect and would not be encashed/redeemed after May 31, 2021. However, the central bank extended the redemption deadline up to September 30, 2021.
The central bank had disallowed any cash payment for encashment of the bonds. However, the bondholders could opt for replacement/encashment of the bonds, including conversion to premium prize bonds (registered); replacement with a special saving certificate/defence saving certificate; and encashment at face value by transferring the amount directly to the account holders’ bank account.
In June 2019, the government had already banned the circulation of Rs40,000 denomination bearer prize bonds. This also led to massive encashment in Rs25,000 denomination bearer prize bonds.
The encashment/redemption in Rs25,000 bearer prize bonds is around Rs143 billion, compared with the closing stock as of April 2020.
The federal government, in an effort to document the economy and comply with the conditions of the Financial Action Task Force (FATF), has started phasing out the unregistered prize bonds from circulation.
So far, the government has banned prize bonds with the denominations of Rs25,000 and Rs40,000. This has resulted in an investment of Rs33.26 billion in registered bonds of both denominations.
The government aims at banning prize bonds of all denominations to bring the money into the documented economy. Further, it is also planning to bring bearer saving certificates into the documented economy.