AN OVERVIEW OF NATIONAL

PRIZE BOND
Prepared by
Fatima Younes
Mutahira Farid
Haider Abbas
Irum
Zia ud Din
Ali Rehman

Supervised by
Sikandar Khan Usafzai
 Table of contents
1. Introduction
2. History of prize bonds
3. Prize bond
4. Purpose of issuance
5. Nature
6. Denominations and prizes
7. Sales of prize bonds
8. Resale/Reissue
9. Printing and supply
10. Forgery in prize bonds
11. Measures to prevent forgery
12. Treatment of forged bonds
13. Draw (dates, draw mechanism, draw committee)
14. Encashment of prize bonds
15. Claim bonds and their encashment
16. Procedure of prize money claim
17. Discontinuation of 40000 bond
18. Reasons
19. Alternatives
20. Benefits of prize bonds
21. Disadvantages of prize bonds
22. Conclusion
23. Recommendations
24. References
 Executive summary
This report presents an overview of national prize bond scheme in Pakistan. It discusses al the
aspects related to prize bonds providing detailed in formation about all. It pays special
attention to the recent discontinuation of the national prize bond of 40000 denomination and
hence discusses its reasons and available alternatives. In the end the report presents few
recommendations for improvements in national prize bond management.
Introduction
Prize bond is a borrowing scheme initiated by the government directed towards public. It’s a
certificate that promises an award many times higher than its face value. Its an interest free
loan between government and public. The government lifts the surplus money already in
circulation in the economy through the sale of prize bonds and raises funds for investments in
its projects. Three months after the sale of these securities, draws are held and the lifted
money is payed back to the public in the shape of prize money.
This scheme has long been in vogue in the country and is basically aimed at promoting
saving culture among public, regulating money supply in the economy and a smooth
mobilization of funds between government and general public.
Its one of the most secure investments since the principal amount is always refundable. Due
to this low risk factor this scheme is very popular among general public and a huge number
of people regularly invest in this scheme. It is interest free and has no expiry as holders can
keep bonds as long as they wish, and the bond is always valid. People have confidence in the
scheme due to its complete transparency. Tax is also deducted on the prize money which adds
to the revenue of the government. This is how its one of the major sources of government’s
income.
It has a two-way benefit for the public and government because both the parties help each
other in furthering their monetary interests and secure their mutual benefit. But apart from all
its positive aspects there is still a need for improvement as there are a few discrepancies in
the procedure that have their disadvantages and need to be highlighted.
All the above-mentioned information will be briefly discussed in this report.

History of prize bonds

Prize bonds were authorized first in United Kingdom under T he Finance Act 1956. Premium
bonds were also introduced at the same time. The first bond was sold in March 1957 and the
first draw was held in September. The scheme was operated by the Bank of Ireland which
was the central bank. Initially, the draw was held biannually i-e one in March and the other in
September. A serial number consisting of six digits was drawn randomly while this serial
number was increased to seven digits in 1972. In 1993, draws were held on weekly basis on a
computer driven random number generator to determine winning numbers.

History of prize bond in Pakistan

The first prize bonds in the subcontinent were issued on sale in denomination of Rs. 10 and
Rs. 100, by the undivided Indian government on 15th January 1944 and could be cashed on
any date after 15th January 1949. These were called “Five Year interest-free Bonds 1949”.

After the partition of sub-continent, Pakistan first issued the interest-free “National Prize
Bonds” of Rs. 10 in October 1960, managed by the ‘Central Directorate of National Savings’
(CDNS). The Prize Bonds were launched by the then Minister, Gen. K.M. Shaikh, and the
first Bond was also purchased by him. Later Rs. 5, 11, 50, 100, 500, 1000, 5000, 10000 &
25000 denomination Prize Bonds were issued.

The draw of each Prize Bond was held every three months, with the first draw held in January
1961. The traditional drum was used initially for the draw, but imported machines similar to
slot machines were later used. The draws were supervised by draw committees, with the
chairman being a senior Government officer, and members from the State Bank of Pakistan
and CDNS.
The smallest denomination bond issued till date is of Rs. 5 that was first issued in 1964.

Prize bond
Prize bond is simply a security issued by government in the form of a paper/certificate under
government decree. It entitles the holder of it to receive prize money from government if the
bond wins in the draw or the face value of bond on demand. It can more conveniently be
called a government loan.

Purpose of issuing prize bonds

Prize bonds are issued for multiple purposes by the government, but its prime objective is to
raise funds from the public and reinvest them in government projects or to fulfil some other
government needs. Prize Bond are a source of government borrowing.

The secondary objectives of this scheme are a smooth mobilization of funds from savers to
investors thereby benefiting both. It also aims to promote the habit of saving in public and
involving all the segments of the public in it by issuing various denomination bonds making
the scheme accessible to entire public. Another purpose served by prize bonds is that money
supply is regulated as to money constantly keeps moving from savers to investors and then
back to savers.

Nature of prize bond

By nature, prize bond is a bearer’s certificate it means that it belongs to the bearer not the
purchaser since there is no documentation or registration carried out at the time of purchase
of bond. If the purchaser loses the bond he or she can not prove by any means that the bond
belongs to them.

Denominations & Prizes

Denomination basically means the face values in which different prize bonds are issued. There
are multiple denominations in which bonds are issued. Currently, a total of eight denominations
of bonds are in circulation with Rs. 100 being the smallest and Rs. 40000 being the largest. The
current denominations are as follows:
Rs.100, Rs.200, Rs. 750, Rs.7500, Rs.15000, Rs.25000, Rs. 400000
No documentation is needed at the time of purchase or sale of prize bond. However, the
stamped date on the bond holds importance as it shows when the holder becomes eligible for
the prize.
 The winning prize is divided in three categories,

(1st, 2nd and 3rd). The number of prizes vary in each category based on denomination.

Denomination First Prize Second Prize 3rd Prize

(Rs) Number Amount Number Amount Number Amount

of Prizes (Rs) of Prizes (Rs) of Prizes (Rs)

100 01 700,000 03 200,000 1199 1,000

200 01 750,000 05 250,000 2394 1,250

750 01 1,500,000 03 500,000 1696 9,300

1,500 01 3,000,000 03 1,000,000 1696 18,500

7,500 01 15,000,000 03 5,000,000 1696 93,000

15,000 01 30,000,000 03 10,000,000 1696 185,000

25,000 01 50,000,000 03 15,000,000 1696 312,000

40,000 01 75,000,000 03 25,000,000 1696 500,000

Number of prizes for 40,000 denominations

Category Number of prize No of series Total prizes

First Prize 01 40 40

2nd Prize 03 40 120

3rd Prize 1696 40 67,840

SALE OF PRIZE BOND

Prize bond is the product of ministry of finance and since they cannot manage it, they have
delegated this responsibility to State Bank of Pakistan.
In Pakistan, Prize bonds are printed by Pakistan security printing corporation(PSPC). PSPC
then issued prize bonds to State Bank of Pakistan (BSC). One can get/purchase these prize
bonds from 16 field offices of SBP(BSC). Other sources of sales of prize bonds are National
Saving Centre and designated Commercial Banks.
There is no formal or prescribed application form in case of sale of prize bond and no need to
write the name and address of purchaser however the address of the branch selling the prize
bond are mentioned. Sale of fresh prize bonds is reported in a register which is named as PB
15. Reissue of bonds is not reported in this register.
The sales of Rs.40000/- bonds are now banned by Ministry of Finance. SBP now has updated
their policy regarding the sale, purchase and its claim etc. about Rs.40000/- prize bonds. They
are now replaced by Rs.40000/- Premium bond.

Open period is period of a month after declaration of draw is known as Open period
during which bonds can be purchased and sold to locals.

Shut period 60 days prior to a draw, the State Bank and other authorized organization stop
selling the prize bonds of that denomination. This period of 60 days is called the shut period.
Usually prize bonds are sold at face value during this time.

RESALE /REISSUE OF PRIZE BONDS

Resale and reissue of prize bonds is the same. It is the sale of bonds that come back from
circulation either during the shut period through encashment or after the draw. The reissue
bonds are reported in PB 35. The bonds that are not sold out and are still in the stock are not
reported in PB35. Commercial banks are also issued PB35 in which they report their reissued
bonds.
If there is a prize on re-issuable bonds in the current draw, the prize money will be given to
the government.

Printing & Supply of the National Prize Bonds:

National Prize Bonds are being printed by “Pakistan Security Printing Corporation" and must
be approved by central government in consolation with STATE BANK OF PAKISTAN and
the duty of PSPC (Pakistan Security Printing Corporation) to ensure that the ink & material
used in these price Bonds must be rare & unique and must not be easy available in market, to
avoid frauds. National prize bonds are printed with serial number of six random alpha-
numerical digits. These serial number are preceded by single and thereafter same double
alphabets i.e. (A, B, C) etc AA, BB, CC and such completion allot to Bonds will be known as
“BONDS OF SERIES”. The alphabets (I) & (O) aren’t printed on PRIZE BONDS because
these paper money Bonds the letter “O” and “I” have no value especially in PRIZE BONDS
because it confuses itself with zero and one.

Prize Bond Management

The process of managing paper money from printing till destruction of these paper money or
PRIZE BONDS is called Price Bond Management.

Forgery in prize bonds

Forgery
Forgery in general is the illegal replication of any important document, signature, painting or
any such thing. It is a crime and the core purpose of it is deceiving someone.

How prize bonds are forged

In case of prize bonds, two types of forgeries are encountered. Either the bond is designed or
made illegally or its tempered.

Tempering
Tempering is done by interfering with or altering some features of the original bond to make
it a deception. It may involve manipulating the number of prize bond or attaching a winning
number to an ordinary bond after tearing its part containing the number.

Forged bonds
Forged bonds are the imitation of original bonds with the intent of deceiving somebody.

Two modes of prize bond dealing

Generally prize bonds e dealt in two modes:
1. Encashment: encashment means returning the face value of a prize bond that does not
win in a draw.
2. Prize winning: prize winning bonds are those that win prize in a draw and prize
money is paid against them.
Both can be forged but its practiced mostly in prize winning. Tempered bonds are also treated
as forged bonds.

Measures to prevent forgery

Security features
High security features are added to every prize bond that make it readily distinguishable from
a forged/tempered bond. These bonds are printed in the offset process SPL made paper and
carry the following security features:
In Paper
1. Enlarged watermark
2. Micro-printed security thread
3. Invisible colored fiber
In Printing
 1. Micro-printed tint in rainbow color
2. Guilloche patter
3. Visible fluorescent rosette
4. Invisible denomination print
5. Numbering in red fluorescent ink
There is a denomination wise variation in the security features.

Initial scrutiny
In initial scrutiny, the officer holding the counter examines the prize bond based on his/her
experience. He/she checks the stamp, the paper, date of issue, number and the series of the
bond. They process the bond if it passes the initial scrutiny.

Use of machines at field offices

Few machines are used in the field offices that help confirming the genuiness of the bond
that its made sure that payments are not made against forged bonds. These machines are:

Magnifying glass
The bond is checked under a magnifying glass. This is a very basic measure taken by the
officer dealing at the counter so that he/she may know that the bond is genuine.

Document verifier
If any doubt arises at the initial scrutiny, the bond is examined under the document verifier
which is a machine used at the field offices. It has three main features:
1. Ultra violet light: it checks the glow
2. Infrared light (I.R): makes visible the metallic print
3. Watermark: it helps checking the watermark of the bond
Stamps
All field offices use different stamps. Stamp is an important security feature and any
tempering in that makes the bond fall short of complete genuiness.

Treatment of forged bonds

Different treatments are practiced for encashment bonds and prize-winning bonds. both are
discussed below:

Encashment
In case of encashment, forgery is less frequent but there is still a chance. If the bond is found
to be forged/tempered after going through all the initial examination at the field office, it is
not facilitated and is retained with the office. This bond is then forwarded to ACM (Assistant
Chief Manager) and its complete noting is carried out in which the date, details of the
claimant, his/her ID card number etc. are recorded. Then the bond is sent to PSPC (Pakistan
Security Printing Corporation) for further examination. Any tempering in features is
confirmed from PSPC but if there is some tempering in the stamp, its reported to FIA
(Federal Investigation Agency). The cash department keeps the hardcopy of everyday stamp
as a record which is sent to FIA when demanded for investigation of forged bonds and in this
case legal proceedings are carried out against the claimant.

Prize winning
Forgery/tempering is mostly practiced in prize winning bonds. The bond is driven through all
steps of genuiness confirmation at the field office. Its rosette and other security features are
closely examined. If any security feature is missing, the prize bond is sent to PSPC. The bond
proved to be forged is retained for seven years with the DCM (Deputy Chief Manager) after
which it is destroyed.
The seven years period is a legal time period for the retention of the prize bond so that if any
claimant files a case against SBP BSC, it could be presented as an evidence.

Draw of prize bonds

Draw dates
The dates for drawing paper money are announced by Chief Director of National Savings, Ministry of
Finance; Government of Pakistan in newspapers and e-newspaper. The draw of National Prize Bonds
is held during business days and is conducted quarterly a year means draw of prize bond are made 4
times each year after every 3 months.

Draw committee
The draw at drawing centre is held under supervision of CDNS, managed by draw committee
as consisting of the following members:

• Chairman: an officer of the government servant e.g. Lawyers, educationists etc

• Secretary: an officer of the SBP BSC branch offices at which draw is held e.g. deputy
chief manger acts as secretary to chairman.
• two officers from National savings in which one of would be from Audit
Department.
• Member one member from SBP BSC (BANK) and two non-official members from
Chamber of Commerce & Industry, total in

Draw Mechanism
Paper money draw held by committee constituted by Central Directorate of National Savings (CDNS)
and open to locals. Winning prize bonds are drawn via hand operated machines, operated by special
children in front to committee members and locals attending the drawing ceremony. Draw machine is
also checked by locals before drawing prize bonds to ensure that machine is working normally. This
whole activity gets recorded through cameras. After the draw is over, the winning number’s list is sent
to audit where the list is tallied with the recording and if any mistake is encountered, its registered on
the spot.
ENCASHMENT OF PRIZE BOND
When face value of bond is demanded by the claimant, its called encashment. The prize bond
is a bearer instrument and can be encashed at any time from SBP BSC or from commercial
banks. By any time, it means that prize bonds having no expiry period until it is banned by
government. To encash a prize bond, Public can approach to the cash counter at SBP(BSC).

The bond is encashed by the claimant at cash counter after verifying the necessary conditions
required for claiming of encashment.

CONDITIONS
Following conditions are necessary for an encashment of a prize bond:

• The bond must be Genuine.

• The bond must contain the date of issue and the place from where it was issued.
• Series and number are intact.
• A mutilated bond cannot be encashed however slightly mutilated bonds are accepted
for encashment.

Claim bonds
Claim bonds are those which are not in their original condition. They may be soiled, washed,
burnt or torn. Such bonds need verification before encashment or prize money claim.

Encashment of claim bonds

Claim bonds are encashed at claim counter for which claimant has to go through following
procedure.

• The claimant has to present the bond at the claim counter along with its photocopy, a
CNIC photocopy and claimant’s signatures at the back of the bond’s copy.
• After that a claim form is filled by the officer at the counter and a receipt is given to
the claimant.
• If the bond is to be processed at office the claimant is given an encashment period of
at least 10 days and if has to be sent to PSPC for verification, it will be encashed in 30
days.
PROCEDURE OF PRIZE MONEY CLAIM
If prize money is Rs.1250/- or below, you can claim it anywhere including State Bank of
Pakistan, National saving center or the branches of scheduled bank. However, if the prize
amount exceeds Rs.1250/-, claimant can only claim the prize money at branches of State
Bank of Pakistan.
 For prizes below Rs. 18,500/-, the claimant can go to nearest SBP (BSC), fill the prize money
claim form, and get the prize money in cash. In most cases the claimant gets the tax
certificate on the same day. However, if the prize money is above Rs. 18,500/-, claimant has
to go through a process of five steps:

• Visit the nearest SBP (BSC), fill the PB 23 form including a copy of prize winning
bond, original bond and a copy of your CNIC with your signatures at the back of the
prize bond copy and submit it at counter.
• After submission of form, you are issued a receipt, which acknowledge your prize
money claim. As the prize money is below one million, the duration is 05 working
days from the receipt of claim and for prize money above one million the duration is
30 working days.
• The payment order will be deposited to claimant’s commercial bank account.
• Once the payment has been credited to claimant’s account, he/she go back to SBP
(BSC) to get tax deduction certificate.

• For claiming a prize bond, the date of issuance is important.

National Prize Bonds - Forms

Application for Payment of face value of Mutilated/Defaced Prize Bonds English Urdu

Prize Money Claim Application Form - (Pb-23) English Urdu

Premium Prize Bonds (Registered) Forms

PPB-1 Application for Purchase of PPB-For Individual (Single/ Jointly) Investors English Urdu

PPB-1 (A) Application for Purchase of PPB-For Corporate Investors English Urdu

PPB-2 Application for Encashment of PPB-For Individual (Single/ Jointly) Investors English Urdu

PPB-2 (A) Application for Encashment of PPB-For Joint Corporate Investors English Urdu

PPB-3 Application for Transfer of PPB-For Individual (Single/ Jointly) Investors English Urdu

PPB-7 Application for Lost PPB-For Individual (Single/ Jointly) Investors English Urdu

PPB-7 (A) Application for Lost PPB-For Joint Corporate Investors English Urdu

PPB-9 Letter of Authorization English Urdu

PPB-10 Application for Certificate of Investment English Urdu

Benefits of Prize Bonds
More Profitable

The prize earned is many times bigger than the actual investment, so it results in a bigger
profit.

Secure investment

Bond holder’s investment is always same because even if the bond does not win in the draw
the principal is always refundable.

Transparency

The process of the draw is completely transparent which has built public’s confidence in the
scheme.

Affordable

The scheme is designed in such a way that its affordable to all the segments of the public.
The denomination starts from Rs.100 which makes it easy for everyone to be part of the
scheme.

Liquid investment

Investment in prize bonds is very liquid as it can always be encashed.

Collateral

It can be used as collateral against any loan.

Disadvantages of Prize Bonds

Lack of documentation
Since prize bond is a bearer’s certificate and is not registered in the name of the holder, it
becomes prone to many issues due to this undocumented nature.
Aids corruption
Big denomination prize bonds are usually used as a tool to convert black money into white
money. They aid in criminal activity as the white-collar criminals buy the winning numbers
from original bond holders at a slightly higher price and fake that bond as their source for
earning that money.
Aids tax evasion
Big wigs also evade their taxes on income through these certificates in the same manner as
mentioned above.

Money Laundering
Big prize money has been found to be a prominent source of money laundering.

Discontinuation of 40000 Prize Bond

The Rs40,000 prize bond is the most expensive of the eight denominations the government
offers — Rs100 being the cheapest. By issuing these bonds, the government aims to
encourage a culture of savings among its citizens and, at the same time, mobile these savings
to finance their own needs as opposed to borrowing from banks, which is expensive.

Why was the bond discontinued?

Genuine investors were interested in buying the Rs40,000 bond because of the high prize
money it offered, but it was also a favourite for those who wanted to wash their dirty money
and dodge the taxman. These are the people who evade taxes.
So here is how it worked: they first bought the bonds from anyone willing to sell them and in
doing so, got rid of cash. If they were to deposit the same cash into their bank account, they
would be required to explain the source of this income. As this cash comes from a prize bond
backed by the government thus it is clean and good to land in a bank. If asked to explain its
source, one can say they got it from selling their prize bond. Many people don’t want to go
through the hassle of cashing their bonds through official channels, so they sell it to anyone
willing to pay cash – and the ones who want to clean their dirty money don’t mind paying a
bit extra.
The move will also address concerns of the global watchdogs, who remained suspicious
about the parking of black money through threes bonds. Pakistan is currently on the
negative list of the Financial Action Task Force (FATF).
As of November 2018, there was an investment of Rs910 billion in all types of prize
bonds. An amount of Rs249.5 billion or 27.5% of the total investments alone was in the
Rs40,000 denomination.

Alternative For 40000 prize Bond

If one currently has this bond, you have nine months to avail one of three choices. You can
cash it anytime, convert it into either a Special Savings Certificate or defense Savings
Certificate or your third option is to convert it into a Premium Prize Bond.

Encashment
The government has also given encashment option to the bondholders. In case the
bondholder desires to encash the bond, the encashment proceeds would be credited to the
specified bank account of the holder.
 Special Saving Certificate(SSC)
Special Savings Certificates (SSCs) was launched on February 4, 1990 that offers a unique
investment opportunity for small and medium savers to meet their periodic financial needs.
SSCs are available in the denomination of:
• 500/-, Rs.1000/-, Rs. 5,000/-, Rs. 10,000/-, Rs. 50,000/-, Rs. 100,000/-, Rs. 500,000/-, Rs.
1,000,000/-
Profit is payable on the completion of each period of six months.
Special Savings Certificate gives a profit of 12.47%.

Who Can Invest?

All Pakistani Nationals as well as Foreign Nationals can purchase. Institutions may also
invest their employees related funds such as pension, gratuity, superannuation, contributory
provident fund and trusty fund etc.
How to Purchase?
SSCs can be purchased from any National Savings Centre (NSC), Pakistan Post Office (PPO)
or authorized branch of a Scheduled Bank and the State Bank of Pakistan (SBP) by filling in
the SC-1 (Application form), available free of cost from all the above issuing offices.
Documents Required with the Application Form
• A copy of the (CNIC)
Minor
• A copy of Form B or Child Registration Certificate (CRC) as issued by NADRA(minor).
Mode of Deposit
SSC can be purchased by depositing cash at the Issuing Office or by presenting a cheque/
draft/ pay-order.
Investment Limit
• Minimum: Rs.500/-
• No maximum investment limits
Encashment
SSCs is encashable at par any time after the date of purchase. However, no profit is payable if
the encashment is made before completion of six.
Tax & Zakat
The rate of tax to be deducted shall be as follows:
• Filers: In case the payable profit is Rs 500,000/- or above, the rate shall be 15% on
such profit. However, in case profit is less than Rs 500,000/- the rate of WHT shall be 10% of
the yield/profit.
• Non-Filers: In case the payable profit is Rs 500,000/- or above, the rate shall be 30% on
such profit. However, in case profit is less than Rs 500,000/- the rate of WHT shall be 20% of
the yield/profit.
 •

Defense Saving Certificate (DSC)

To meet the financial needs of long term category investors and provide them with the
opportunity to take maximum benefit of their savings, the Government of Pakistan introduced
Defense Savings Certificates (DSC) scheme in the year 1966.

The scheme has specifically been designed to meet the future requirements of the depositors
with a maturity period of 10 years.

The profit rate for a Defense Savings Certificate is 11.57% per year.

These Certificates are available in the denominations of:

• 500/-, Rs.1000/-, Rs. 5,000/-, Rs. 10,000/-, Rs. 50,000/, Rs. 100,000/-, Rs. 500,000/-, Rs.
1,000,000/-

Who Can Invest?

All Pakistani Nationals as well as Foreign Nationals can purchase DSCs. Institutions may
also invest their employees’ related funds such as pension, gratuity, superannuation,
contributory provident fund and trusty fund etc.

How to Purchase?
 DSCs can be purchased from any National Savings Centre (NSC), Pakistan Post Office
(PPO) or authorized branches of Scheduled Banks and the State Bank of Pakistan (SBP) by
filling in the SC-I (Application Form) which available free of cost from all the above issuing
offices.
Documents Required with the Application Form
• A copy of the (CNIC)
Overseas Pakistanis
• A copy of National Identity Card for Overseas Pakistanis (NICOP) or Pakistan Origin Card
(POC)
Minor
• A copy of Form B or Child Registration Certificate (CRC) as issued by NADRA
Institutional Investors
• An attested copy of NTN Certificate or Institutional Registration Certificate (IRC).
Foreign Nationals
• A copy of the Passport
• Mode of Deposit
DSCs can be purchased by depositing cash or cheque/ draft/ pay-order at the Issuing Office.
The Certificate shall be issued immediately against cash payment. However, in case of
deposit through cheque/ draft/ pay-order, the Certificate shall be issued on the date of
realization of the cheque/ draft/ pay-order after receiving the clearance advice.

Encashment
DSCs are encashable at par any time after the date of purchase. However, no profit is payable
if encashment is made before completion of one complete year. DSCs issue/purchase/re-
invested on or after November 15, 2010 shall not be re-invested on maturity.
Premium Prize Bond
Premium prize bond is newly launched national savings scheme where investor can earn
prize money as well as profit. The Premium Prize Bonds offer higher prize money and a bi-
annual fixed profit (based on the government’s interest rate). There is one major difference:
Premium Bonds must be registered in the bearer’s name.

Features:
➢ Profit rate of premium prize bond is 1.5% bi-annual.
➢ Any Pakistani Individuals, Public and Private Sector Institutions except Banks,
Insurance Companies and Mutual funds.
➢ Presently, only one denomination of Rs. 40,000 Premium Prize Bond is in circulation
and others are in the pipeline.
➢ WHT is applicable on profit as well as prize money.
➢ Highest Prize of the premium prize bond is Rs. 80 million.

To compare prize money between the two, see the table below:

Rs 40000 Premium Rs 40000 Standard bond

Bond

First Prize 80 million(1 winner) 75 million ( 1 winner)

Second 30 million (3 25 million (3 winners)

Prize winner)

Third 500,000 (664 500,000 (1696 winners)

Prize winner)
Conclusion
The scheme of prize bonds is offered by government to public and is managed by State Bank
of Pakistan. The management procedures are explained in detail in the report. Several
measures have been taken by the State Bank to manage this scheme smoothly. The
procedures are designed well so that they are in the prime interest of the public as these
procedures are fully transparent and free of any kind of partiality. Operations pertaining to
prize bonds are purposed to be error free. From printing to sale and from sale to draw and
prize money payment, all the operations are public friendly. It is government’s most
trustworthy security for the public. The benefits of the scheme are mentioned in the report.
Apart from this efficient management, few discrepancies are still being encountered which
need to be combated. Government has come forward and taken a prominent step to counter
the above-mentioned problems related to this scheme by banning the 40000-denomination
bond and introducing a registered premium bond of the same denomination. This will add to
the prospects of bringing improvements to this scheme. Other improvements that we assume
should be made in the process are discussed in the recommendations.

Recommendations:
• More automation is required since there is a lot of record keeping and paper work,
automation will reduce the chance of error as well as loss of record.
• There should be choice for availing interest in premium bonds so that the religious
factor does not become a hurdle.
• Awareness must be created among the public about prize bond and detailed
procedure.
• Responsiveness should be enhanced as the verification procedure is quite long which
presents some problem to public. Field offices should be equipped with the machinery
for the verification of the bond, so the time constraint is managed at least for small
denominations.
• Employees should be trained more frequently to enhance their efficiency.
• Payment time period should be enhanced.
• All the denominations of prize bonds should be converted to premium bonds so that
the loop holes in the system could be filled.

References
1. www.sbp.org.com.pk
2. Past internship reports
3. www.dawnnews.com
4. www.samaanews.com