Prize Bond

Prize Bond a public savings scheme, was introduced by the government of Bangladesh in 1974 with a view to mobilising domestic resources and providing incentive to the small savers. The bonds issued so far under this scheme are 'bearer' in nature and as such the holders are treated as the owners of the bonds. These bonds are in fact government debt and on behalf of the government, bangladesh bank is responsible for entire management of the scheme. Prize bonds do not bear any interest. But there is a system of regular prize draw with a certain period of intervals and on the basis of the results the prizes are given as per the rules set for bonds concerned. The bonds can be purchased from the offices of Bangladesh Bank, branches of the authorized commercial and specialized banks, National Saving Bureau and the post offices. A scheme for sale of prize bonds in the United Arab Emirates and UK was introduced in November 1979 and October 1980 through janata bank and sonali bank respectively.

The first issue of prize bond was of 10-taka denomination, which was introduced in June 1974. Up to June 1995, 82 series of 10-taka prize bonds were put on sale and the progressive net sale of the bond stood at Tk 160 million as of end June 1995. A total of 110 draws of these bonds were held on bimonthly basis under the single common draw system. The prizes of the draws were: first prize - Tk 50,000 (one for each series), second prize - Tk 10,000 (one for each series), third prize - Tk 1000 (four prizes for each series), fourth prize - Tk 500 (four prizes for each series), and fifth prize - Tk 100 (ninety prizes for each series).

Sale of prize bonds of 10-taka denomination was suspended in July 1995, since then these bonds were being gradually withdrawn from the market. The outstanding amount stood at Tk 18.1 million at the end of June 2000. The second issue of prize bond introduced in 1985 was of 50-taka denomination. Up to 1995, 29 series of this bond were put on sale and the cumulative sale at the end of June 1995 stood at Tk 570 million. The system of prize draws for this bond was similar to that for 10-taka prize bonds. The prize money, however, was different: first prize, Tk 250,000 (one for each series); second prize, Tk 50,000 (one for each series); third prize, Tk 5000 (four prizes for each series); fourth prize; Tk 2500 (four prizes for each series); and fifth prize, Tk 500 (ninety prizes for each series). Sale of this bond was also suspended in July 1995 and the outstanding balances with holders stood at Tk 15.8 million at the end of June 2000.

The third and on-going issue of prize bond of 100-taka denomination was introduced on 2 July 1995. Prize draws of this series are held on three months basis and the prizes are: first prize, Tk 1,000,000 (one for each series), second prize, Tk 500,000 (one for each series); third prize,Tk 100,000 (two prizes for each series); fourth prize, Tk 50,000 (two prizes for each series); and fifth prize, Tk 10,000 (forty prizes for each series). The amounts of first and second prizes of the 100-taka bonds were reduced to Tk 600,000 and Tk 325,000 respectively in October 1996. In order that a bond is to be included in the draw, it must be purchased before two months of the draw date. The net sale of the bond was Tk 1,241.2 million in 1995-96 and increased to Tk 1,667.3 million at the end of financial year 1999-2000.

The claims for prizes can be lodged within two years after draw. Bonds for which prizes are disbursed are bought back from their holders at their face value and are preserved at the Bangladesh Bank for up to two years. Prizes had been exempt of income tax up to 2011, when the government levied 20% income tax on the prize money. [Syed Ahmed Khan and Md A Samad Sarker]