Pakistan prepares to launch first-ever digital bonds

Pakistan's National Savings Directorate has prepared draft rules to launch the first-ever digital prize bonds — registered in the name of subscribers — aimed at further documenting the economy.

Sources told Nukta that draft rules have been prepared for digitally operating prize bonds having value of PKR 500, PKR 1,000, PKR 5,000 and PKR 10,000. These draft rules have been sent to the federal cabinet for approval.

Investors interested in the digital bonds would be able to purchase them by submitting an application through the Directorate after opening an account. Investors would have to pay tax on the prize money while no Zakat would be applicable.

The move would help further document the movement of currency with its circulation reaching PKR 9.4 trillion.

Another important aspect of the digital bonds is that they would eliminate the risk of theft, loss, and damage.

Investors could also nominate any person at the time of purchases.

The government has long wanted to discourage investment in bonds as they had been a safe haven for undocumented trail of funds and black money could be parked easily.

In 2018, prize bonds-purchasing was around PKR 952 billion. Since 2019, the government decided to discontinue the issuance of bigger denomination bonds and in a phased manner, halted the selling of PKR 40,000, PKR 25,000, PKR 15,000, and PKR 7,500 prize bonds.

In 2018, investment in PKR 1,500 and PKR 750 bonds was around PKR 108 billion and PKR 91 billion, respectively. With only these two bigger bonds available for investors, the amount parked in them climbed to PKR 178 billion and PKR 115 billion. respectively, by December, according to the data collected from State Bank of Pakistan.

Following the discontinuation of big ticket bonds, the government introduced PKR 40,000 and PKR 25,000 bonds which could only be issued in the name of investors. The latest data indicates that investment in these bonds by December reached to PKR 36.3 billion and PKR 24.5 billion, respectively.

According to data, currently PKR 748 million are parked in PKR 40,000 bonds, PKR 658 million in PKR 25,000 bonds, PKR 1.3 billion in PKR 15,000 bonds and PKR 1 billion in PKR 7,500 bonds