KARACHI: The government of Pakistan has started issuance of Islamic Naya Pakistan Certificates (INPCs) for overseas Pakistanis and Resident Pakistanis with declared assets abroad.
INPCs are in full conformity with Shariah principles certified by reputed Shariah Scholars and are available only through Roshan Digital Accounts which can be opened online by overseas Pakistanis through eight selected banks. The government is offering a very attractive expected rate of return ranging 5.5 to 7 percent on USD and 9.5 to 11 percent on Pak Rupee INPCs.
After the formal launching, Meezan Bank Limited issued the first INPC to an overseas Pakistani living in Bahrain on Friday. The conventional Naya Pakistan Certificates was launched in September via agent banks for overseas Pakistanis at a fixed amount of profit. Now the government of Pakistan has launched Islamic Naya Pakistan Certificates to cater the need of those investors, which intend to invest in Shariah compliant certificates.
Government of Pakistan (GoP), vide S.R.O 964(I)/2020 notified the Shariah structure for Investment in Islamic Naya Pakistan Certificate (INPCs, accordingly the State Bank of Pakistan has issued the Standard Operating Procedures (SOPs) for investment in INPCs.
The federal government has established a wholly-owned special purpose vehicle, namely Islamic NPC Company Limited (INPCCL), which will be managed under the mandate of its Board of Directors (BoDs). INPCCL will be issuing INPCs denominated in USD and PKR to the agent banks and investors.
For the purpose of issuing USD and PKR denominated INPCs, the INPCCL will establish two Modaraba pools in both currencies. The agent banks will make initial investment aggregating USD 20 million and PKR 5,000 million in respective pools by subscribing special INPCs reserved for agent banks.
The fund by INPCCL in each pool will be used for extending Shariah compliant financing to the federal government. The agent banks investment will be of transitory nature liable to be retired or withdrawn on receipt of investments from individual investor(s).
Similarly, the agent banks will be responsible to make available liquidity to the Modaraba pools in the event of redemption or premature withdrawal of funds by investors, by re-subscribing the special INPCs reserved for agent banks.
INPCCL will enter into an Agency Agreement with Agents Bank for sale of INPCs to their clients maintaining Roshan Digital Accounts with them. INPCCL will also communicate the expected rates, Profit Sharing Ratio (PSR) and weightages applicable to different tenors and categories of INPCs and Agent Banks' investment in the USD and PKR pools to be maintained by INPCCL for the issuance of INPCs.
As per procedure for investment in INPCs, the INPCCL will issue the INPCs in a scripless format, which will be subscribed by eligible individuals through Foreign Currency Value Account (FCVA) or NRP Rupee Value Account (NRVA), being marketed as Roshan Digital Accounts (RDAs) by the agent banks.
The funds for investment in INPCs must be remitted from abroad in the investor's FCVA or NRVA after the 30th day of June, 2020. The investors will have the option to subscribe PKR denominated or/and US Dollar denominated INPCs of 3-Month, 6-Month, 12-Month, 3-Year and 5-Year tenors.
Minimum amount of investment US dollar will be USD 5,000 with integral multiples of USD 1,000 and for Pak Rupee denominated INPCs minimum investment will be PKR 100,000 with integral multiples of PKR 10,000.
The profit on 3-Month, 6-Month and 12-Month tenor INPCs will be paid on maturity along with principal or on premature encashment. Whereas, profit on 3-Year and 5-year INPCs will be paid on a half-yearly basis.
The Investor will place the order to subscribe the INPCs electronically by visiting the NPC webpage of their respective agent bank and giving investment details including currency, tenor and the amount to be invested.
The agent banks before accepting the investment request will ensure that the investor has read the terms and conditions of the investment in INPCs and has digitally signed the Modaraba agreement between the Investor and INPCCL enclosed.
The PKR denominated INPCs can only be purchased from the balances in the investors' NRVAs whereas USD denominated INPCs can only be purchased from the balances in the investors' FCVAs.
For the investors having their FCVAs in currency other than USD, the banks will debit the investors' account by an amount equivalent to the amount of investment requested in USD denominated INPCs by applying the exchange rate prevailing at the time of execution of the transaction. The agent banks will, after debiting the investor's account with an amount equal to the amount of his/her investment order, consolidate the tenor wise orders received from FCVA or NRVA holders during a working day till 1:00 p.m. Pakistan Standard Time (PST), and will transmit to the SBP.
In case of purchase of US Dollar denominated INPCs, agent banks have two options to remit the purchase value of INPCs to State Bank of Pakistan (SBP) either through their USD Clearing Account maintained with SBP, or through transfer of funds to the Nostro account of SBP maintained with the Federal Reserve Bank of New York, New York, USA.
Transaction charges, including but not limited to correspondent bank charges will be on the account of the banks, and the banks shall ensure to remit to the SBP Nostro account the complete purchase amount of the INPCs.
After debiting the USD Clearing Account, or as the case may be, or the Pak Rupees current account of the concerned bank, SBP will afford credit to INPCCL accounts maintained with SBP.
INPCCL shall make the periodic profit payments on INPCs on their respective due dates by advising SBP-BSC Karachi to credit the USD Clearing account of the bank, or as the case may be the PKR current account, with advice to the bank concerned for onward credit to the investors' FCVA or NRVA on the same day.
Maturity proceeds of INPCs, including the amount of final profit (net of deduction of tax), will be credited to the USD Clearing account or PKR current account of the investor's bank maintained with SBP.
On realization of maturity proceeds by the banks in their accounts with the SBP, the bank will be liable to credit the FCVA or NRVA of respective investor on the same day and debit the investor's IPS account.
In pursuance of the Agency Agreement for Sale of Islamic Naya Pakistan Certificates between INPCCL and agent banks, the banks shall act as INPCCL's agent for the digital execution of the Modaraba Agreement and receipt of investment amount from the investors and subsequent transfer to the INPCCL.
Copyright Business Recorder, 2020
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