Since the termination of Rs. 40,000 denomination bearer prize bonds, around Rs. 177.41 billion have been documented so far. The government, in June, had discontinued Rs. 40,000 prize bonds as part of its ongoing clampdown on black economic activities.
The bearer instruments have been known as a parking lot for the undocumented economy.
According to a report by a local newspaper, the total investment in bearer prize bonds of Rs. 40,000 denomination fell to Rs. 81.38 billion by July-end 2019 as compared with Rs. 258 billion in May 2019.
The government discontinued these prize bonds through a notification on June 24, 2019. In compliance with the government’s announcement, the State Bank of Pakistan (SBP) also issued procedure for banks to facilitate the general public in exchanging the unregistered prize bonds through three different modes.
The SBP informed the banks that such prize bonds would not be sold after June 24, 2019 and would also not be encashed/redeemed after March 31, 2020, while also ending the draws for the same.
The central bank further said that these bearer prize bonds cannot be exchanged against cash; however, they can be redeemed against registered prize bonds or converted into national saving schemes or face value (direct transfer to the bank account of bond-holder).
The report stated that due to replacement of the bearer prize bonds of Rs. 40,000 denomination, the total investment in prize bonds fell to Rs. 766 billion by July 2019, compared with Rs. 951.64 billion by May 2019.
Till May 2019 the total investment in premium prize bonds was Rs. 6.17 billion. But after the restriction imposed on bearer bonds, the investment in registered prize bonds increased to Rs. 13.26 billion by end-July 2019 stated the report.
According to the SBP, the bearer instrument can be exchanged in savings schemes such as Special Saving Certificates (SSC) or Defence Saving Certificates (DSC). The total investment into the saving certificates increased to Rs. 2.24 trillion by June 2019 as against Rs. 2.20 trillion By May 2019.
The government is aiming to transform all the bearer prize bonds into registered scrips.