National Savings first of its kind product for Overseas Pakistanis, expected to raise $1 billion

National Savings’ work on the introduction of a new product targeted specifically for overseas Pakistanis has reached its final stage where the organization awaits vetting from the Federal Cabinet and the Finance Division.

The product that is to be launched after obtaining the necessary regulatory approvals, is a bond called the Overseas Pakistani Savings Certificate (OPSC) that intends to raise funds for the government by tapping into the Pakistani diaspora, in turn offering them a risk free investment that could be purchased in both US dollars and Pakistani Rupees.

The proposed tenor of these bonds shall be three years and five years, paying a monthly profit to overseas investors of Pakistani origin that want to save up while getting monthly returns on these bonds.

The product has been proposed to be launched in countries belonging to the Gulf Cooperation Council (GCC), and is subsequently planned to be rolled out in the United Kingdom and the United States of America. Thereafter, in its third phase, the product would be rolled out across the globe, keeping in view the regulatory requirements of the markets.

As with all other retail products of the government, the Central Directorate of National Savings will remain the custodian for OPSC.

With regard to the progress on this product, National Savings has partnered with a consortium consisting of big names like Ernst & Young, top law firm Haidermota BNR & Co., and Al Tamimi & Co. as advisors for this project. Together with National Savings, this consortium has been assisting in the structuring of the proposed product, and will be responsible for analyzing legal and tax related matters in its target markets.

National Savings, after a competitive process, has also appointed United Bank Limited as the manger/operator who shall be responsible for the managing of the back-office work of the product. Moreover, according to sources, potential agents and distributors in the target markets have already been identified.

UBL, EY and Haidermota BNR & Co. are currently working on the operational modalities and mechanism of the product, which will, however, have to be eventually approved by the State Bank of Pakistan.

The development is expected to be a welcome one for both foreign Pakistani investors and the incoming government, as the designate Finance minister, Asad Umar, has on numerous occasions claimed his upcoming government’s intention to tap into the overseas Pakistani market and help mitigate the dire macroeconomic situation of the country by raising funds from this segment.

According to a source close to the finance ministry, the product is expected to raise as much as $1 billion for the country.

Another official of the finance ministry expects the National Savings to fetch an initial investment in the range of $550 million and $1.2 billion, per annum, on the premise that there are about 4.5 million overseas Pakistanis living in the GCC countries at the moment.

Besides sending a positive vibe throughout the Pakistani diaspora on the offering of the first of its kind risk free and script-less security, the product is expected to result in an increase in the remittance sent back home through the banking channels.