The State Bank of Pakistan has revised the settlement mechanism for Premium Prize Bond sales, requiring banks to settle all reported sale transactions on the same day. The decision was communicated through a circular issued on Thursday as the central bank introduced changes to the existing process for reporting and settling Premium Prize Bond transactions.
Under the revised mechanism, banks will be required to report Premium Prize Bond sale transactions through the Data Acquisition Portal according to the prescribed timelines. The updated process is intended to establish a daily settlement framework under which the amounts reported by individual banks will be settled on the same day.
The State Bank of Pakistan Banking Services Corporation will debit the account of the relevant bank based on the amount of Premium Prize Bond sales reported by that bank for the day. This means banks will be responsible for ensuring that the proceeds associated with their reported sales are settled within the required timeframe rather than carrying the transactions forward for settlement at a later date.
The central bank has also specified financial consequences for banks that fail to complete settlement on the same day. According to the circular, any bank that does not settle the proceeds of Premium Prize Bond sale transactions within the same day will be liable to pay use of funds for the period of the delay. The applicable amount will be calculated using the State Bank of Pakistan overnight reverse repo ceiling rate prevailing on each day during the period of delay.
The Karachi office of the State Bank of Pakistan Banking Services Corporation will be responsible for calculating and recovering the use of funds from the concerned bank. The amount will be recovered by debiting the bank’s account, with a corresponding credit to the Central Non-Food Account. The mechanism places direct responsibility on banks for ensuring timely settlement of Premium Prize Bond sales and creates a financial cost for delays.
The revised framework also addresses situations where prize money or profit is paid incorrectly because of reporting failures or inaccurate transaction information. The State Bank of Pakistan said that where profit or prize money is paid erroneously because a commercial bank fails to report, reports late, or misreports sale, encashment or transfer transactions, the concerned bank will be liable for the gross amount wrongly paid.
The circular provides for adjustment of income tax where such an adjustment is possible. The provision places financial responsibility on the commercial bank whose reporting error or delay results in an incorrect payment, rather than leaving the cost entirely with the broader prize bond settlement system.
The changes cover several stages of Premium Prize Bond transaction reporting, including sales, encashments and transfers. Accurate and timely reporting will therefore become an important requirement for commercial banks operating within the revised mechanism. Banks will need to ensure that transaction information is submitted through the prescribed reporting channel within the timelines set by the State Bank of Pakistan.
The revised settlement process represents a tighter operational framework for Premium Prize Bond transactions, with daily settlement requirements and defined financial consequences for delays or inaccurate reporting. By linking settlement directly to the daily amount reported by each bank, the State Bank of Pakistan is placing greater emphasis on timely transaction reporting and settlement discipline.
The circular also establishes a clear recovery process for delayed settlements and incorrect payments. Through the State Bank of Pakistan Banking Services Corporation, amounts arising from delayed settlement and applicable use of funds charges will be recovered directly from the concerned bank’s account.
The updated requirements will therefore require commercial banks to strengthen their internal processes for Premium Prize Bond sales, reporting, encashment and transfer transactions. Banks will also remain financially responsible where errors in reporting result in incorrect payments of profit or prize money, subject to applicable income tax adjustments.
Follow the PakBanker Whatsapp Channel for updates across Pakistan’s banking ecosystem.