SBP informs ‘rules of investment’ for Naya Pakistan Certificates. Here’s all you need to know

The certificates would be offered digitally via the web-links of eight agent banks.

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On Thursday, the State Bank of Pakistan (SBP) disclosed detailed rules for investing in the Naya Pakistan Certificates, which is part of an endeavor to attract overseas Pakistanis’ investments to uplift foreign exchange reserves.

The SBP said eligible individuals would subscribe to the certificates via NRP (Non-Resident Pakistani) Rupee Value Account (NRVA) or FCVA (Foreign Currency Value Account). They would be marketed as Roshan Digital Accounts (RDAs) by the representative banks.

“The reserves for investment in certificates must be transmitted from abroad in the investor’s FCVA or NRVA after the 30th of June 2020. The agent banks shall be in charge of Customer Due Diligence (CDD), Enhanced Due Diligence (EDD), and Know Your Customer (KYC) of the investors,” the SBP said.

The certificates would be offered digitally via the web-links of eight agent banks.

SBP Issues Rules of Investment for Naya Pakistan Certificates

The investors would be eligible to make a minimum investment of $5,000 with integral multiples of $ 1,000 in dollar-denominated certificates. For the PKR designated certificates, the amount will be Rs. 100,000, with Integral multiples of Rs. 10,000.

The central bank informed that these debt certificates would offer 5% to 7% returns on various tenors of the rupee-designated certificates. The yields on the dollar-designated certificates would be 9%-11%.

“The 3-Month, 6-Month, and 12-Month tenor certificates would be single-coupon securities on which principal and profit shall be paid on maturity or premature encashment. Though, 3-year and 5-year certificates would be coupon securities, on which periodic profit payment shall be paid on a half-yearly basis,” it said.

The periodic coupon settlements would be made on a six-monthly basis only regarding certificates of 3-year and 5-year maturities in their respective currencies, as per the SBP.

Interestingly, the investors can have early encashment of their certificates.

To achieve this, the accumulated rate of return of the investor should be equivalent to the return rate of the certificate’s nearest date of maturity.

Nonetheless, the central bank cleared that no profit will be paid in case of encashment of certificates before the completion of three months.

Maturity proceeds of certificates, plus the amount of final coupon (net of deduction of tax), would be credited to the dollar clearing account or the rupee current account of the investor’s bank account maintained with the SBP.

On realizing the banks’ maturity proceeds in their accounts with the SBP, the bank would be responsible for credit the FCVA or NRVA of the investor on the same day. If the banks fail to do so, it would be liable to pay compensation for the coupon rate’s delayed period as may apply to the respective certificates.

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