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Banks asked to promote Pakistan Banao Certificates

Updated February 09, 2019

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PBCs, offer 6.25 per cent profit for its three-year and 6.75pc for five-year certificates. — File
PBCs, offer 6.25 per cent profit for its three-year and 6.75pc for five-year certificates. — File

KARACHI: Banks have been asked to promote Pakistan Banao Certificates (PBC) launched by the government to raise dollars from overseas Pakistanis.

PBCs, which offer 6.25 per cent profit for its three-year, and 6.75pc for five-year certificates were launched by Prime Minister Imran Khan on Jan 31.

The State Bank of Pakistan on Friday issued a circular to all banks and development finance institutions (DFIs) to promote the new bond for attracting higher amount of foreign investment for the government.

“To create awareness among investors and promote investment in these certificates, all banks and DFIs are advised to place the PBC Web Portal Link on their websites and social media pages at the earliest,” said the SBP in a circular.

While the government has pinned high hopes with the PBC, some independent economists have criticised the government over the timing of launching the bond.

The prime minister, at the time of the certificate’s launching, said that this was a scheme that would not only uplift Pakistan’s image but also generate profits for overseas Pakistanis.

However, Standard and Poor’s issued a critical report about the economy of Pakistan and downgraded its rating for the country soon after the PBCs’ introduction.

The rating agency downgraded Pakistan’s long-term credit rating to ‘B-Negative’ from ‘B’.

Pakistan’s economic outlook, as well as its external position, have deteriorated well beyond our previous expectations, said the agency.

The changed rating created some uncertainty about the success of new instruments despite the fact that returns on PBCs were still very attractive.

“It is too early to assess the performance of the new saving instrument, but the downgrading of long-term credibility by the Standard and Poor’s would certainly cast a negative impact on the promotion of saving certificates,” said a senior banker. However, he maintained that the overseas Pakistanis have shown great confidence in the present government.

The PBC is the first sovereign retail instrument being offered by the Government of Pakistan (GoP) that allows overseas Pakistanis to contribute to their country’s development and earn handsome returns at the same time.

The PBCs are available for 3 and 5 years maturity, with profit rates of 6.25 per cent and 6.75pc per annum, respectively, payable semi-annually.

“The international banks may offer up to 2 to 2.5pc per annum on deposits but the offer of PBC is highly attractive for overseas Pakistanis and they are expected to bring more greenbacks for Pakistan,” said the banker.

The minimum investment amount for these certificates is $5000 or higher with no maximum limit. The investor will remit the intended amount from his own account outside Pakistan to the SBP account with National Bank of Pakistan (NBP) New York.

Published in Dawn, February 9th, 2019