KARACHI: The State Bank of Pakistan (SBP) has enabled the Microfinance Banks (MFBs) account holders to invest in the government securities, a statement said on Wednesday.
The central bank said that to provide greater opportunities for the public to invest in the government securities and in line with the objective of diversifying funding for this exclusive avenue various measures have been taken, according to which MFBs have been permitted to offer Investor Portfolio of Securities (IPS) accounts to their customers.
MFB account holders have been allowed to open IPS accounts with any scheduled bank to invest in the government securities
In order to invest in government securities, individuals and retail investors need to open an IPS account to hold, sell and purchase these securities. Previously, only individuals and entities having a rupee denominated account with scheduled banks could open IPS accounts.
The main attraction for investment in government securities is their secure nature and attractive profits, which are generally higher than the ones offered by banks on saving accounts.
The new measures allow two options for both regular and branchless banking (BB) account holders of Microfinance Banks. Under the first option, the account holders of MFBs can open IPS accounts with their MFB to use their funds for sale and purchase of the government securities.
In the second option, the account holders of MFBs can open IPS accounts with any scheduled bank to invest in the government securities. Both options allow MFBs account holders to use amounts available in their accounts or BB/wallet for the investment.
The recent issuance of Customers’ Digital Onboarding Framework by the SBP will further simplify and facilitate the process of IPS account opening, under which banks and MFBs have been allowed to share customers’ KYC related information with any SBP and the Securities and Exchange Commission of Pakistan (SECP) regulated entity in compliance with applicable laws and regulations after obtaining customer’s consent.
These measures would also pave the way for development of systems to facilitate end-to-end investments in the government securities in a completely digital manner.
The central bank is confident that new measures will further promote the culture of savings as these allow a more convenient avenue for channelising small investments in the government securities.
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