Government of Pakistan announces Naya Pakistan Certificates

Overseas Pakistani have remained an integral part of the Pakistan’s economy and the country’s foreign exchange reserves have been immensely supported by the remittance they sent back home. In an another attempt to attract investment from Overseas Pakistanis, the Government of Pakistan has announced a new investment scheme called “Naya Pakistan Certificates (NPCs)”.

The new certificates provides an opportunity to contribute toward development of Pakistan vis-à-vis offering lucrative rates of return. The NPCs are available in both conventional form as well as in Shari’ah compliant form.

These certificates can be purchased by Individual Non Resident Pakistanis (NRPs) having NICOP, foreigners having Pakistan Origin Card (POC), Members of Overseas Pakistanis Foundation and/or an employee or official of the Federal or Provincial Government posted abroad that are eligible to open foreign currency value accounts (FCVA) and NRP rupee value accounts (NRVA). Naya Pakistan Certificate can be purchased by a Foreign Currency Value Account holder (FCVA) and Pakistani Rupee Value account holder (NRVA). Further, a resident Pakistani having assets abroad and declared in the FBR returns can also invest in the scheme through FCVA in Pakistan.

Key Features of NPCs

The Naya Pakistan Certificates have a wide range of tenors starting from three months, six months, twelve months, thirty six months and sixty months. NPCs are issued in two currencies i.e. US dollars and Pakistani Rupees. The USD denominated NPCs have a minimum investment of USD 5,000 and further investment can be made in the multiples of USD 1,000. On the other hand, the minimum investment for PKR denominated NPCs is Rs. 100,000 with further investment in multiples of Rs. 10,000/-.

The Certificates can also be pledged as security for raising financing in Pakistan. In case of death of NPCs investor, the payment of investment amount inclusive of principal and profit (if any) will be made to the legal heirs as per the succession certificate.

The profit on NPC is subject to Withholding tax as per the Section 151 of the income Tax Ordinance, 2001 while the investment is exempted from Zakat deduction. Automatic reinvested or roll-over after the maturity is not allowed.

What is the Rate of Return on Naya Pakistan Certificate?

The prevailing rates of return on NPCs is as under:

How to Purchase Naya Pakistan Certificate

The Naya Pakistan Certificates can be purchased digitally through the website of eight agent commercial banks. The conventional form of NPCs can be purchased from Bank Alfalah, Faysal Bank, HBL, MCB, Samba Bank, UBL and Standard Chartered Bank while shariah complaint variant can be purchased from Meezan Bank.

The Investor will submit request for NPCs electronically through the website of respective agent bank and providing investment details such as currency, tenor and the amount. Certificates will be issued digitally in the IPS account of the investor.

Funds in NRV account can be used to purchase NPCs in PKR whereas NPCs in USD denomination can be purchased from the balances in the investors FCV accounts.

Procedure for Periodic / Profit payments

The periodic coupon payments will be made on six (6) monthly basis only in respect of NPCs of 3-year and 5-year maturities in their respective currencies.

Profit on 3 months, 6 months and 12 Months tenor certificates will be paid on maturity or on premature encashment, whereas; profit on three year and five year certificates shall be paid semi-annually.

Premature Encashment of NPCs

The Investors can have premature encashment of their certificates. Profit on premature encashment will be paid as per the prevailing rate of return of the nearest shorter maturity of Certificates. However, no profit is paid if encashment is made before completion of three months. Encashment request will be processed on T+2 basis.

Redemption at Maturity of NPCs

After maturity, the investment amount including the amount of final coupon (net of deduction of tax), shall be credited to the USD Clearing account or PKR current account of the investor’s bank account maintained with SBP. On realization of proceeds by the agent banks, the bank will credit the FCV or NRV account of respective investor on the same day.

It is imperative to mention that with the issuance of Naya Pakistan Certificate, the government of Pakistan ha repealed Pakistan Banao Certificate and Overseas Pakistani Savings Bills. However, the issued certificates shall be continued as per the rules.