Rate of return for NPCs revised downward

KARACHI: The federal government has revised the rate of return downward for Conventional Naya Pakistan Certificates (NPCs), primarily due to a sharp decline in the key policy rate over the past six months.

This marks the first reduction in NPC returns since the State Bank of Pakistan (SBP) adopted a monetary easing stance in June 2024.

Citing a lower inflation outlook, the SBP’s monetary policy committee implemented a series of rate cuts, reducing the key policy rate by a cumulative 10 percent to support economic growth.

NPCs: Rate of return again revised upward to attract more investment

The Government of Pakistan has officially notified a revision in the rate of return for Conventional NPCs, effective February 20, 2025.Under the revised rates, the profit on NPCs has declined by up to 8.50 percent for the 12-month tenor in PKR.

For a minimum investment of $1,000, with integral multiples of $500, the gross annual return (before tax) has been reduced up to 2 percent. The 3-month NPCs rate has decreased from 8.25 percent to 7 percent.

The 6-month NPCs profit rate has been lowered from 8.50 percent to 7 percent. The 12-month NPCs now offer a 7 percent return, down from the previous 9 percent. The profit rate for 3-year and 5-year NPCs has been adjusted to 7.50 percent, down from 8 percent.

For investments of Rs 10,000, with integral multiples of Rs 1,000, the gross annual return (before tax) on NPCs has also been revised downward. The 3-month NPCs rate has declined by 7.50 percent, now set at 13.50 percent.

The 6-month NPCs rate has dropped by 7.75 percent to 13.50 percent. The 12-month NPCs rate for investments in Pakistani Rupees has fallen by 8.50 percent to 13 percent. The profit rate for 3-year and 5-year NPCs has been set at 12.50 percent, compared to the previous 17.50 percent and 15 percent, respectively.

For an investment of 1,000 GBP, with integral multiples of 500 GBP, the rate of return on NPCs remains unchanged at 7.25 percent for the 3-month tenor and 7.50 percent for the 3-year and 5-year tenors.

However, the return for 6-month and 12-month NPCs has been revised downward. The 6-month rate has decreased by 0.25 percent, now set at 7.25 percent. The 12-month rate has been reduced by 0.75 percent, also fixed at 7.25 percent.

For an investment of 1,000 Euros, with integral multiples of 500 euros, the rate of return on 3-month NPCs has declined from 6.25 percent to 5.25 percent. The 6-month return has dropped from 6.50 percent to 5.25 percent. The profit rate for 1-year, 3-year, and 5-year investments is now fixed at 5.25 percent.

According to SBP Government of Pakistan, Finance Division (External Finance Wing), vide Gazette Notification No. S.R.O. 33(I)/2025 dated January 16, 2025 and S. R. O. 174(I) 2025 dated February 12, 2025 (Annexure-A) has notified the revision in rate of return in NPCs.

Copyright Business Recorder, 2025