All You Need to Know About Prize Bonds in Pakistan

Prize Bonds in Pakistan

Prize bonds are a type of investment in which an individual purchases a bond with the hope of winning a prize through a lottery draw. These bonds are offered by various governments around the world, including Pakistan’s, as a means of generating revenue through investments. gives a detailed overview of prize bonds in Pakistan below, including its history, advantages, disadvantages, and more.


History of Prize Bonds

The history of prize bonds in Pakistan can be traced back to the 1960s when the government introduced the National Prize Bonds Scheme as a means of generating revenue through investments. At the time, the scheme offered denominations ranging from 10 PKR to 5,000 PKR, with prizes awarded through a lottery draw.

Initially, the prize bond scheme faced a number of challenges, including issues related to transparency and credibility. However, over time, the government took steps to address these concerns and improve the mechanism.

Since its inception, the prize bond system in Pakistan has undergone several changes aimed at improving its efficiency and transparency. One of the most significant reforms came in 1999 when the State Bank of Pakistan introduced a computerised system for prize bond draws. This helped eliminate the possibility of fraud and ensured that the draws were conducted in a fair and transparent manner.

In recent years, the government has also introduced several measures to promote the use of prize bonds as a means of generating revenue. For example, in 2017, it announced that it would no longer issue bearer prize bonds, which were vulnerable to counterfeiting and other frauds. Instead, all prize bonds would be registered, making it easier to track their ownership and avoid such risks.

Today, the prize bond system in Pakistan continues to be a popular investment option, with millions of bonds sold each year. The system offers a range of denominations, from 100 PKR to 40,000 PKR, with prizes awarded through regular lottery draws.


The Popularity of Prize Bonds


Bundle of prize bonds


The popularity of prize bonds in Pakistan can be attributed to several factors. Firstly, it provides a secure investment option for individuals who may not have access to other forms of investment, such as the Pakistan stock market or real estate. Additionally, they offer the potential for high returns, as the prizes offered through lottery draws can be of high value.

Moreover, the tax-free winnings of prize bonds are another key factor contributing to their popularity. Unlike other forms of investment, such as fixed deposits or mutual funds, the winnings from prize bonds are not taxed, which makes them an attractive investment option for individuals seeking to maximise their returns.


How Prize Bonds Work


40000 rupees price bond


There are a few things you need to know about how these prize bonds actually work.


Types of Prize Bonds and Their Denominations

There are several types of prize bonds available in Pakistan, each with a different denomination and prize value. The denominations range from 100 PKR to 40,000 PKR. The types of prize bonds available include:

Regular Prize Bonds: These are the most common type of prize bonds and are available in denominations of 100 PKR, 200 PKR, 750 PKR, 1,500 PKR, 7,500 PKR, and 15,000 PKR.

Premium Prize Bonds: These are higher-value bonds with denominations of 40,000 PKR. They offer larger prizes but are also more expensive to purchase.


Prize Bond Draws and Schedule

Prize bond draws are conducted regularly throughout the year, with different denominations and prize values offered in each draw. The schedule for prize bond draws is published in advance, and individuals can purchase bonds before each draw to be eligible for prizes.

Draws for regular prize bonds are held quarterly, while draws for premium bonds are held biannually. The draws are conducted through a computerised system, and winning bond numbers are selected randomly.


Claiming Prizes and Redemption of Prize Bonds

Individuals who hold winning prize bonds can claim their prizes by submitting their bond numbers and other relevant information to the State Bank of Pakistan or a designated branch of a commercial banks in Pakistan. Prizes are paid out in cash, and winners must provide proof of identity and ownership of the winning bond.

Prize bonds can be redeemed at any time, and individuals can either receive the face value of the bond or enter it into another prize bond draw. If a bond is lost or damaged, individuals can apply for a duplicate bond through the State Bank of Pakistan or a designated commercial bank.


Advantages of Investing in Prize Bonds

There are several advantages of investing in prize bonds, including:


Potential for High Returns

Prize bond draws offer the chance to win large amounts of money, with prizes ranging from a few thousand PKR to several million PKR. This means that even a small investment in prize bonds can result in a significant return if a bond is selected in a winning draw.


Tax-Free Winnings

Another advantage of investing in prize bonds is that the winnings are tax-free. This means that individuals can keep the full amount of their prize money without having to pay any taxes on it. This makes prize bonds a more attractive investment option compared to other forms of investment where tax deductions are applied to the returns.


Secure Investment With Low Risk

Prize bonds are considered a secure investment with low risk. Unlike other forms of investment, such as stocks or real estate, prize bonds do not lose their face value and are guaranteed by the government. While there is no guarantee that an individual will win a prize, there is also no risk of losing the investment amount.

Additionally, prize bonds can be easily purchased from designated banks or through authorised dealers, making it a convenient investment option for individuals who do not have access to other forms of investment. 


Disadvantages of Investing in Prize Bonds

While there are several advantages to investing in prize bonds, there are also some disadvantages to consider. These include:


Limited Liquidity and Low Interest Rates

Prize bonds have limited liquidity, which means that they cannot be easily converted into cash. In order to redeem a prize bond, an individual must wait for the next scheduled draw, which can be several months away. Additionally, the interest rates on prize bonds are relatively low compared to other forms of investment, such as fixed deposits or government bonds.


Inflation Risk and Opportunity Cost

Another disadvantage of investing in prize bonds is the risk of inflation and opportunity cost. Inflation reduces the value of money over time, and the low-interest rates on prize bonds may not keep up with inflation rates. Additionally, by investing in prize bonds, individuals may be missing out on other investment opportunities that offer higher returns.


Probability of Winning Is Low

While the potential for high returns exists, the likelihood of actually winning a prize is slim. This means that individuals who invest in prize bonds may not see a return on their investment for several years, if at all.

Overall, while prize bonds offer some advantages as an investment option, they also have some limitations and risks to consider. It is important for individuals to carefully evaluate their investment options and consider their financial goals and risk tolerance before investing in prize bonds or any other form of investment.


Criticisms and Controversies Surrounding Prize Bonds in Pakistan

Despite the popularity of prize bonds in Pakistan, there have been several criticisms and controversies surrounding the system. These include:


Accusations of Corruption and Money Laundering

There have been allegations of corruption and money laundering associated with prize bonds in Pakistan. It has been reported that they are used to evade taxes and launder money. The lack of transparency in the system has also raised concerns about possible fraudulent activities.


Calls for Reforms and Alternative Investment Options

Several experts and economists have called for reforms to the prize bond system in Pakistan. Some have suggested that the government should introduce measures to increase transparency and accountability in the system. Others have recommended alternative investment options that offer higher returns and are more secure than prize bonds.


Response of Government and Regulatory Authorities

In response to the feedback, the government and regulatory authorities have taken a few steps to address the issues. The State Bank of Pakistan has introduced several reforms to increase transparency and reduce the risk of fraudulent activities. The government has also introduced alternative investment options, such as the National Savings Certificates, to provide individuals with secure investment options.

However, some critics argue that these measures are not enough to address the underlying issues with the prize bond system. They call for more comprehensive reforms that address the root causes of corruption and money laundering.


Frequently Asked Questions (FAQs)


What is the price of Rs.750 bonds in Pakistan?

For the 750 PKR prize bond, a single lucky winner is awarded the 1st prize of 1,500,000 PKR, while 3 lucky winners receive the second prize of 500,000 PKR each.


Is prize bonds a good investment?

Many people question whether prize bonds are a good investment option. However, in terms of pure investment, the answer would be a definite no. Prize bonds are not a suitable option for individuals seeking returns on their investments, as they do not offer immediate favourable returns.


How can I buy 25000 prize bonds in Pakistan?

Premium prize bonds are offered in denominations of 25,000 PKR and 40,000 PKR. To apply for the sale of a premium prize bond, you must provide certain documents, including a copy of your CNIC, an account maintenance certificate that includes your account title, IBAN number, account status, and the name of your bank and branch. Additionally, if you are a filer, you must provide a tax certificate, and details of your nominee’s CNIC must also be provided.


Is 1500 prize bond banned in Pakistan?

It was announced by the government in April 2021 that the sale of national prize bonds with denominations of 7,500 PKR and 15,000 PKR would be discontinued.


Which bond is most profitable?

Corporate bond funds are an attractive investment option due to their potential for providing a favourable return while minimising risk. They offer investors the opportunity to earn a regular income that typically exceeds the interest rate earned on Fixed Deposits (FDs).


Is prize bond a good investment in Pakistan?

National Savings, operating under the State Bank of Pakistan (SBP), has been offering prize bonds for several decades, which are widely regarded as a secure investment option. Essentially, purchasing a prize bond is similar to buying a lottery ticket, with the key difference being that even if you don’t win, you don’t lose any money.

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