Pakistan Banao Certificates: Attractive Investment for Acute Investors

Despite being presented with immense opportunities we as a people have a reputation forunder-utilizing them to their fullest potential. The diaspora of Pakistanis abroad or NRPs (Non Resident Pakistanis) can be one example of ‘untapped opportunities.’

With the current economic climate, the government of Pakistan Tehreek-e-Insaf (PTI) is committed to seizing every opportunity that comes our way, with the aim of increasing investment and providing profitable returns to Pakistanis who choose to invest in the Pakistan Banao Certificates(PBC).

Remittances from overseas Pakistanis has seen an upward trend,per the latest data from the State Bank of Pakistan (SBP).Remittances rose by 8.74 percent to $16.096 billion in the first nine months of the 2018 – 19 fiscal year, as compared to $14.802 billion the year before.

Making upthe sixth largest diaspora in the world, residing across major economic hubs including: the United States, the United Kingdom, and the Middle East; the potential room for growthis much more.

With the involvement of overseas Pakistanis in relation to foreign currency generation being virtually pivotal, this sprung the insight towards the utility of these figures to help address Pakistan’s long term debt woes. Overseas Pakistanis have historically proved that potential funds and investment from these groups certainly carry a large influence.Their continued involvement is something the new government and the PBC aims to be part of, as a way to find innovative solutions to dealing with the nation’s deficit.

PBCs couldemerge as a vital tool for this government in raising capital for critical infrastructure projects including the construction of dams, road networks, power generation plants, and transmission projects, among others.

What is the Pakistan Banao Certificate?

The Pakistan Banao Certificate is the first sovereign retail instrument of its kind offered by the Government of Pakistan (GoP) catering to overseas Pakistanis; raising capital from PBCs is crucial for the country, plagued by a widening fiscal deficit and a negative Balance of Payment.

In terms of finance, PBC is a scrip-less instrument registered in the Securities General Ledgers Account (SGLA) that is maintained with the State Bank of Pakistan. PBCs issued will reside in an Investor Portfolio Security (IPS) account of the investor so as to better keep track of investment of each individual investment.

What are the benefitsforInvestors?

The Pakistan Banao Certificates provide a sovereign guarantee, and are available for 3-year and 5-year maturity, with a profit rate of 6.25 percent and 6.75 percent per annum respectively; they are payable semi-annually.

Not only do PBCs offer profit on a bi-annual basis,they also offer higher profit margins compared to bonds in other countries. Coupon in US bonds, for example, offer profit rates of 2.49 percent and 2.875 percent respectively, for three and five year maturity.

KSA bonds offer profit rates between 2.89 percent and 3.5-4.0 percent for three and five year maturity.

Investors can also submit encashment applications online, by accessing the ‘Redemption’ module of the Pakistan Banao Certificateswebsite portal.

In a world full of debt traps and repayment strategies, the PBC proves to be an exciting platform of revenue generation, and similar strategies on foreign currency income generation could be the key in addressing our long term debt crisis.

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