SBP incentivises small accountholders

Allows them to invest in government securities

KARACHI:

The State Bank of Pakistan (SBP) has permitted microfinance banks (MFBs) to offer Investor Portfolio of Securities (IPS) accounts to their customers.

Moreover, it has allowed microfinance bank accountholders to open IPS accounts with any scheduled bank to invest in government securities.

According to a statement issued on Wednesday, the measures have been taken to incentivise the public to invest in government securities, which is in line with the central bank’s objective of diversifying funding for this exclusive avenue.

“In order to invest in government securities, individuals and retail investors need to open IPS accounts to hold, sell and purchase the securities,” it said.

“Previously, only individuals and entities having a rupee-denominated account with scheduled banks could open IPS accounts.”

The main attraction for investment in government securities is their secure nature and attractive profits, which are generally higher than the ones offered by banks on saving accounts.

The new measures allow two options for both regular and branchless banking (BB) accountholders of microfinance banks.

Under the first option, the accountholders of MFBs can open IPS accounts with their MFB to use their funds for sale and purchase of government securities.

Under the second option, the accountholders of MFBs can open IPS accounts with any scheduled bank to invest in government securities.

Both options allow the accountholders of MFBs to use the amount available in their accounts or BB wallet for investment.

The recent issuance of customers’ digital onboarding framework by the SBP will further simplify and facilitate the process of IPS account opening, under which banks and MFBs have been allowed to share customers’ KYC related information with any SBP/ SECP regulated entity in compliance with the applicable laws and regulations after obtaining customer’s consent.

These measures would also pave the way for the development of systems to facilitate end-to-end investments in government securities in a completely digital manner, the central bank hoped.

“The SBP is confident that the new measures will further promote culture of savings as they provide a more convenient avenue for channelising small investments in government securities.”

Published in The Express Tribune, March 17^th, 2022.

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