New investment avenue: Interest bearing prize bonds to be launched

Rs10,000 bonds will pay profits, prize money.

KARACHI:

The National Savings Organisation (NSO) will launch new prize bonds that, in addition to prize money, will also pay regular interest to the bondholder. Zafar M Sheikh, director general NSO, is expected to formally make the announcement during his visit to the Lahore Stock Exchange (LSE) on Monday, March 12, 2012.

The recent launch of Rs25,000 bonds in February caused quite a stir, fetching billions of rupees as savers rushed to get hold of the certificates – the first draw of which is scheduled in May 2012. Now, the new series of Rs10,000 denomination bonds will come with the additional incentive of receiving interest, along with the opportunity to win prize money.

The Rs10,000 bonds will be another attempt by the NSO to use capital markets for generating funds. Earlier, the NSO successfully launched 3, 5 and 10 years bonds through the exchanges, raising more that Rs3.6 billion.

The NSO is planning to use the stock exchange platform for the issuance, listing and sales of bonds through brokers. The NSO and the LSE are already in discussions for the finalisation of modalities for such an arrangement. Under the proposed draft arrangement, LSE will also be promoting the new bonds as a new listed instrument; for which LSE brokers may become sales agents. A final decision on this proposal is also expected on Monday.

Sheikh took charge as director general of National Savings in November 2007. Within two and half years, his tenure has seen an increase in savings from Rs1,030 billion to Rs2,010 billion, while the NSO has also helped the government manage its deficits. The number of branches of the NSO and its staff members has also increased to 376 and 3700 respectively, while computerisation programmes have increased operational efficiency.

Published in The Express Tribune, March 10^th, 2012.