MUSHTAQ GHUMMAN
ISLAMABAD: The federal government has approved Naya Pakistan Certificates (NPCs) to be issued in foreign and local currencies to non-resident Pakistanis and foreign nationals with Pakistan Origin Card. These will replace the existing short-term Overseas Pakistanis Savings Bills (OPSBs), official sources told Business Recorder.
Earlier, the Cabinet Committee on Disposal of Legislative Cases (CCLC) cleared the pros and cons of the proposal submitted by the Ministry of Finance.
The sources said the main purpose to issue NPCs was to attract investment from overseas Pakistanis which will provide a broad spectrum of investment options to the targeted group, generate much needed resources for the Government, and help shore up the country's foreign exchange reserves.
According to sources, NPCs will offer short- to long-term investment options; they will replace the existing short-term Overseas Pakistanis Savings Bills (OPSBs) issued by the Central Directorate of National Savings and the long-term Pakistan Banao Certificates (PBCs) issued by the Federal Government. The NPCs will be available to (i) non-resident Pakistanis having National Identity Card for Overseas Pakistanis (NICOP); (ii) foreigners with Pakistan Origin Card (POC); (iii) members of Overseas Pakistanis Foundation; (iv) employees or officials of the federal and provincial governments posted abroad, and (v) resident Pakistanis having assets abroad which have been duly declared in latest tax returns submitted to the FBR.
According to Secretary Finance, the Public Debt Act, 1944 authorizes the Government to issue securities and make rules thereof and the ‘Naya Pakistan Certificates Rules, 2020’ are being introduced to regulate the investments in NPCs. These rules have been drafted with the consultation of the State Bank of Pakistan and will replace the PBCs Rules, 2020 and the PBCs Rules, 2018 which shall stand repealed. However, PBCs already issued shall continue to be governed under the PBCs Rules, 2018.
The salient features of the NPCs Rules, 2020 are as follows: (i) certificates shall be issued in conventional as well as Shariah-compliant form; (ii) the tenors shall be of three, six, twelve, thirty-six and sixty months, notified by Finance Division from time to lime; (iii) denomination shall be in both USD and PKR, or in any other currency notified by Finance Division from time to time; (iv) the minimum denomination and the maximum investment limit shall be decided by Finance Division from time to time; (v) issuance shall be scripless or any other form as approved by Finance Division from time to time in consultation with the SBP; (vi) issuance shall be through commercial banks (the agent banks) which will be selected by Finance Division in consultation with the SBP. All record of issuance will be maintained by the SBP; (vii) all necessary due diligence of the purchasers shall be the responsibility of selected agent banks; (viii) funds for investment shall be remitted from abroad in the investors Foreign Currency Value Account (FCVA) or the NRP Rupee Value Account (NRVA) as per prevailing regulations and processes. Provided that funds remitted in these accounts after June 30, 2020 can be used for investment in NPCs; or as (ix) the rate of return and frequency of payment shall be notified by Finance Division from time to time; (x) repayment of profit as well as principal shall be made directly to the investors account. In case of death, the payments shall be made to the legal heir(s) of the deceased in accordance with valid succession certificate or equivalent documentation issued as per law; (xi) NPCs shall be non-transferable except if required under the relevant laws; (xii) NPCs shall not be automatically reinvested or rolled over on maturity; (xiii) NPCs shall be pledgeable as security for raising financing in Pakistan subject to conditions prescribed by the SBP and ;(xiv) premature encashment shall be allowed provided that the rate of return on premature encashment shall be equivalent to the rate of return of the nearest shorter tenor certificate or any rate notified by Finance Division from time to time. No profit shall be paid in case of encashment before completion of three months; (xv) the profit on NPCs shall be subject to deduction of tax in accordance with the law for the time being in force and ; (xvi) there shall be no compulsory deduction of Zakat.
The sources maintained that SBP shall devise and notify Standard Operating Procedures (SOPs) from time to time for sale, encashment, premature encashment, profit disbursement and all other matters to accomplish the purpose of these Rules.
Law & Justice Division has already cleared the Naya Pakistan Certificates Rules, 2020 from legal point of view. The Rules were also published in the official Gazette on August 19, 2020 to invite objections or suggestions as stipulated under Section 28(1) of the Public Debt Act, 1944. Within the given seven day period, no objections or suggestions were received.
