AFTER discontinuation of the regular prize bond of the denomination of Rs 40,000, the Government has gone a step further in halting sale and draws of prize bond of Rs 25,000 denomination, giving a six-month deadline to investors to either encash or convert them into registered bonds. There are also reports that in the next phase, the Government would discontinue bearer prize bonds of denomination of Rs 15,000 and Rs 7,500 as well.
It is understood that the measure is aimed at addressing concerns of the Financial Action Task Force (FATF), which believes black money is parked through these bonds. Pakistan is currently on the grey list of the FATF and the Government is adopting a multi-dimensional strategy to meet demands of the Task Force. However, we have been pointing out in these columns that decisions like discontinuation of bearer bonds, substantial cut in profit on saving schemes and drastic levy of withholding tax on banking transactions are discouraging savings, which are already low in the country. For a long time, different saving schemes and prize bonds served as major sources of raising money to run affairs of the Government but now once bustling national saving centres give a deserted look. Though there is an option of converting the bearer bonds into premium (registered) bonds but discontinuation of prize bond of denomination of Rs 40,000 showed holders of the bond were least interested in registration as they prefer not to disclose their identity. It is because of this that the investment in the bond of denomination of Rs 40,000 has come down from Rs 235 billion to just Rs 20 billion and the same is expected to be the fate of the prize bond of denomination of Rs 25,000. There are apprehensions that the entire saving system might collapse if the authorities continue with anti-saving measures.
