Pakistan establishes digital prize bond rules.

The Federal Government has enacted the Digital Prize Bonds (Registered) Rules, 2024, which will take effect immediately, according to a notice issued by the Finance Division.

The issuing authority under these new regulations will be the Central Directorate of National Savings (CDNS) or any other approved entity.

The bonds will be issued in denominations determined by the Finance Division in the official gazette. They will be accessible in multiples of their face value and issued in series of fewer than a million, as determined by the Finance Division. Importantly, there is no maximum investment restriction on these bonds.

One distinguishing characteristic of these digital prize bonds is that they will be issued in scrip-less format, which means investors will not get physical certificates. Instead, they will receive a system-generated number.

To acquire the bonds, Pakistani individuals aged 18 and up must create a profile on the Digital Prize Bond (DPB) Gateway via the CDNS Mobile Application or other permitted ways. The profile must be connected to either a CDNS Savings Account or a Bank Account (IBAN format). Payments can be made using the associated bank account or CDNS Savings Account, with the purchase date deemed the date of successful payment.

Investors are responsible for updating their personal information using the appropriate gateway.

Customers must utilize the DPB Gateway to redeem their monies, which will be paid back to the same bank or CDNS account they used to make the transaction. In unusual instances, the CDNS may accept payments via a government cheque.

The Finance Division has the right to withdraw any bond from circulation by issuing an official notification, and once removed, no reward claims will be considered. These bonds will be valid until redeemed by the holder or withdrawn by the government.

Prize money will be given in quarterly drawings or as determined by the Finance Division. The yearly draw timetable will be announced in the official gazette.The results will be officially declared, and the reward money will be sent straight into the registered bondholder’s connected account. If a financial institution returns prize money, bondholders have six years to claim it; after that, the government is no longer accountable for the amount, and no profit is made on unclaimed prize money.

The quantity and amount of awards shall be determined by the Finance Division, and no transfer of ownership or bond pledging is permitted. Any erroneous payments made in violation of these regulations shall be recovered and may be deducted from government dues or collected as land revenue arrears.

In the case that the bondholder dies, the principal and prize money will be paid to the lawful heirs following production of a succession certificate, unless the total net due amount is less than Rs500,000. In such circumstances, payment shall be paid to the nominee if a Family Registration Certificate (FRC) from NADRA and an affidavit for equitable distribution among heirs are supplied. If the nominee is a minor or the nomination is illegitimate, a succession certificate is necessary.

Investments in these bonds and prize money obtained will be free from required Zakat deductions, however tax will be levied on the prize money in accordance with the applicable regulations.

To ensure that these regulations are implemented smoothly, the CDNS will develop procedures for the sale, encashment, distribution of prize money, and other associated operations.