The State Bank of Pakistan (SBP) has allowed the account holders of microfinance banks (MFBs) to invest in government securities, as it has permitted the banks to offer Investor Portfolio of Securities (IPS) Accounts to their customers.
According to SBP, this decision has been made to provide greater opportunities to the public to invest in government securities and diversify funding for this exclusive avenue.
The MFB account holders are now entitled to open IPS Accounts with any scheduled bank for the investment in government securities. To invest in government securities, individuals and retail investors need to open an IPS account to hold, sell and purchase these securities.
Previously, only individuals and entities having a PKR 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) account holders of Microfinance Banks. Under the first option, account holders of MFBs can open IPS accounts with their MFB to use their funds for the sale and purchase of government securities. In the second option, account holders of MFBs can open IPS accounts with any Scheduled bank to invest in government securities. Both options allow account holders of MFBs to use amounts available in their accounts or BB/wallet for the investment.
The recent issuance of Customers’ Digital Onboarding Framework by 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 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.
SBP is confident that new measures will further promote the culture of savings as these allow a more convenient avenue for channelizing small investments in government securities.
