KARACHI: The State Bank on Saturday allowed non-bank investor base, including individuals, to invest in treasury bills, Pakistan Investment Bonds and Ijarah Sukuk.
A circular was issued to all banks by the SBP regarding Investor Portfolio Securities Account (IPS) making it mandatory for primary dealers to offer IPS accounts to investors while other scheduled banks can also offer such accounts to non-bank investor base, including individual investors.
The SBP believes that this would widen the investor base by facilitating investment by the non-banking institutions and general public in Government of Pakistan (GoP) marketable securities.
All scheduled banks have been advised through a circular which was issued on Saturday to introduce IPS account opening service to their customers and publicise the same at branch level.
IPS accounts enable customers to maintain custody of their investing securities with the primary dealers and banks and also facilitate the trading of these securities with easy transfers to other accounts.
With regard to opening of IPS account, the circular said any individual or entity which has Rupee denominated account with any scheduled bank will be eligible to open an IPS account.
The circular said that each scheduled bank and primary dealer will devise its own internal guidelines regarding IPS account opening and develop a system for IPS account maintenance which at a minimum should have the capacity to allot account numbers, record transactions and generate activity statements.
All scheduled banks and primary dealers were advised by the SBP to submit copy of internal guidelines in this regard to the Financial Markets Strategy and Conduct Department (FSCD) of the State Bank before Jan 31 next.
Moreover, each scheduled bank and primary dealer will provide activity statements to IPS account holders on quarterly basis at minimum, the circular said and added that the customer wise holding position in each category of government security must be reported to Public Debt Office SBP (BSC) Karachi latest by 5th of each month.
The SBP said each scheduled bank and primary dealer must ensure segregation of the securities held in IPS accounts from its own holdings.
The circular advised all scheduled banks and primary dealers that IPS maintenance charges (if any) must be clearly defined in schedule of charges of scheduled banks or primary dealers.
The SBP said the development of a vibrant government debt market is a prerequisite for strengthening of other sectors within the financial markets.
Earlier this year, an electronic trading platform for GoP debt instruments was launched which provides real-time information about market activity.
It was followed by active engagement of various stakeholders whereby it was realised that a major impediment in the development of this market is the lack of awareness among the general investing institutions and public regarding GoP marketable instruments.
“To address this issue and to widen the investor base, the State Bank has issued these fresh instructions,” said the SBP.