Bearer prize bonds to expire by month-end; Rs28 billion bills still in circulation

KARACHI: The bearer prize bonds of high denomination will expire by the end of the current month but unregistered securities worth billions of rupees are still in circulation.

The government has decided to withdraw the bearer bonds with denominations of Rs7,500, Rs15,000, Rs25,000 and Rs40,000 and set a deadline of December 31, 2021 to exchange with the prescribed mode, including conversion with the premium bonds.

After the expiry of the bearer bonds such bills will become mere pieces of paper.

According to the data released by the State Bank of Pakistan (SBP) on Tuesday, such bearer bonds worth Rs28 billion were held by the investors by the end of October 2021.

However, the bond holders surrendered these bills worth Rs437.59 billion during the last one year. The stock of these bearer bonds were Rs465.59 billion by October 2020.

In June 2019, the government decided to discontinue high denomination bearer bonds in a phased manner. The government on June 24, 2019 announced to discontinue the circulation of Rs40,000 denomination national prize bonds.

Similarly, on December 10, 2020, the government announced to discontinue the circulation of Rs25,000 denomination prize bonds, while in April 2021, the Finance Ministry announced that the national prize bonds of denominations Rs7,500 and Rs15,000 would not be sold.

The bonds can be converted to the premium prize bonds (registered) of denomination of Rs25,000 and Rs40,000 (subject to the adjustment of differential amount) through 16 field offices of the State Bank of Pakistan (SBP) Banking Services Corporation, and branches of six commercial banks, i.e., the National Bank of Pakistan, Habib Bank Limited, United Bank Limited, MCB Bank Limited, Allied Bank Limited, and Bank Alfalah Limited.

The bonds can be replaced with the Special Saving Certificates/Defence Saving Certificates through the 16 field offices of the SBP Banking Services Corporation, authorised commercial banks, and the National Savings Centre.

The bonds will only be encashed by transferring the proceeds to the bonds holder’s bank account through the 16 field offices of the SBP Banking Services Corporation, as well as the authorised commercial bank branches and to the Saving Accounts at the National Savings Centres.

Following the announcement to discontinue the bearer bonds the investments in the premium prize bonds recorded a phenomenal surge.

The investment in the premium prize bonds surged to Rs54.5 billion by the end of October 2021, compared with Rs20.54 billion in the same month of the last year, showing an increase of 169 per cent.

The government on January 23, 2020 notified national savings scheme rules for documentation of investment to prevent money laundering and terror financing in such schemes.

The investment in the saving scheme accounts also witnessed a decline to Rs993.65 billion by September 2021, compared with Rs1.015 trillion a year ago.

The investment in saving certifications declined to Rs2.49 trillion by October 2021 as against Rs2.51 trillion a year ago.

The overall investment in saving schemes and prize bonds fell to Rs3.9 trillion by October 2021 as against Rs4.27 trillion a year ago.

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