KARACHI: Investment in unregistered prize bonds with Rs40,000 denomination sharply fell to Rs193 billion till June-end from Rs258 billion a month earlier as the government decided to pull plug on the bearer instrument, official data revealed on Thursday.
The official stats showed that the total investment in prize bonds fell to Rs886.22 billion by June 2019 compared with Rs951.64 billion a month ago due mainly to replacement of the bearer prize bonds with Rs40,000 denomination.
The bearer government papers have been known as parking lot for undocumented economy. In June, the government announced to discontinue the circulation of Rs40,000 denomination national prize bonds.
In compliance with the government announcement, the State Bank of Pakistan (SBP) also issued instructions to banks about the exchange of bonds. The central bank issued procedure for the banks to facilitate public in exchanging the unregistered prize bonds with three different modes.
The SBP said the bearer prize bonds of Rs40,000 could not be exchanged against cash. They, however, can be redeemed against registered prize bonds or can be converted into national saving schemes or face value (direct transfer to the bank account of bond holder).
The SBP informed the banks that such prize bonds would not be sold after June 24, 2019 and would not be encashed / redeemed after March 31, 2020. No further draws of Rs40,000 denomination national prize bonds would be held, it said.
Till May 2019, the total investment in premium prize bonds was Rs6.17 billion. But, after the restriction imposed on bearer bonds, the investment into registered prize bonds increased to Rs7.66 billion by June-end 2019.
The SBP further said the bearer instrument could be exchanged with special saving or defence saving certificates.
The total investment into the saving certificates increased to Rs2.216 trillion by June 2019 compared with Rs2.20 trillion a month ago.
The third mode of exchange of the bearer bonds was direct transfer to bank accounts. This has reflected in the deposits of baking system that increased to Rs14.45 trillion by June-end compared with Rs13.46 trillion a month ago. However, the rise in deposits could also be attributed to tax amnesty scheme during the period.
The government intended to transform all the bearer prize bonds into registered scrip. The Central Directorate of National Savings, in collaboration with the SBP, is planning to issue scripless registered prize bonds amongst all denominations with objective to document the economy.
The government had launched registered prize bonds of Rs40,000 denomination in March 2017, which could be purchased against certain requirements, including computerised national identity card and valid bank account.
(This news/article originally appeared in The News on August 9th, 2019)