Rs40,000 prize bond to be discontinued

Govt gives 9 months to prize bond holders to convert their saving instruments

ISLAMABAD: The federal government on Thursday gave a nine-month deadline to Rs40,000 denomination prize bonds holders to convert their saving instruments either in cash or in other securities aimed at addressing concerns of the Financial Action Task Force (FATF).

It also immediately discontinued the new draws of the 40,000 prize bonds, as the government plans a big crackdown against tax evasion. The government has allowed Rs40,000 denomination prize bonds holders to register their bonds up to  March 31, 2020, according to the Ministry of Finance.

The Rs40,000 bond is the highest denomination prize bond, out of total eight denominations, ranging from Rs100 to Rs40,000. There was Rs75-million first prize on the Rs40,000 denomination bonds.

The move will also address concerns of the global watchdogs, who are suspicious about the parking of black money through these bonds. Pakistan is currently on the negative list of the FATF.

Pakistanis have invested over Rs950 billion in all types of prize bonds and over one-fourth of the total investments was in the Rs40,000 denomination bonds. These prize bonds have been used to whiten the black money and have remained the key source of corruption and tax evasion in the country.

The Finance Ministry said the Rs40,000 bearer bond can be converted to premium prize bonds that are registered with the government.

The bearer Rs40,000 bonds can be converted through 16 field offices of SBP Banking Services Corporation, and authorised branches of six commercial banks – National Bank of Pakistan, UBL , MCB,  Allied Bank Limited, Habib Bank Limited and Bank Alfalah Limited, said the Finance Ministry.

Similarly, these bonds can be replaced with Special Saving Certificates and Defense Saving Certificates through the 16 field offices of SBP Banking Services Corporation, authorized commercial banks and National Savings Centers.

Rate of return on DSC and SSC are very attractive. Currently, annual rate of return on DSC is 12.47% whereas annual (average) rate of return on SSC is 11.57%, said the Finance Ministry.

The government has also given encashment option to the bondholders. In case the bondholder desires to encash the bond, the encashment proceeds would be credited to the specified bank account of the holder. The SBP as well as all the banks would extend their maximum support to make sure the transfer of payments to respective account of the holder.

The Finance Ministry said no further prize bond draw of Rs40,000 will be held. However, all the prize money claims on the already held draws will be claimable within the period of six years from the date of respective draw, as per the National Prize Bonds Rules, 1999.

But the issuance, encashment and prize bond draws in respect of all other denominations of bearer prize bonds will continue as per exiting procedure, according to National Prize Bonds Rules, 1999.

The Pakistan Muslim League-Nawaz (PML-N) government had launched the Rs40,000 Premium Prize Bond (Registered) and these bearer bonds could be converted into the premium registered bonds of Rs40,000 denomination.

The Finance Ministry said the registered prize bonds offer not only attractive prizes through quarterly draws but also pay reasonable profit through biannual coupon payments.

The registered bonds are secure and not prone to forgery and theft. The Finance Division has already discontinued the fresh issuance of Rs40,000 bearer bonds with effect from this year.