Market Treasury Bills: Issued by

MARKET TREASURY BILLS
Issued by
GOVERNMENT OF PAKISTAN
Investor Guide
Prepared by:
State Bank of Pakistan
Key Features of the Market Treasury
Bills (MTBs)
 Issuer: Government of Pakistan
 Issued in accordance with Public Debt Act 1944
 Denomination: Issued in multiples of PKR 5,000
 Tenors: 3, 6 and 12 months
 Issued at discount
 MTBs are issued in a scrip less (without physical)
form
 Auction schedule: Regular auctions of MTBs are
held on fortnightly basis. A quarterly schedule is
published by SBP at the beginning of each quarter
 Income Tax: Income Tax will be deducted as per
existing law
 Zakat: No compulsory deduction of Zakat at
source
 Custodian: Ultimate custodian is the SBP, but
banks maintain these securities in the Investor
Portfolio of Securities (IPS) Accounts on behalf of
their customers
 Investor can find out the latest auction yields of 3,
6 and 12-month tenors in the auction at
http://www.sbp.org.pk/ecodata/tb.pdf
1
Investment Procedure
Investor Portfolio Securities (IPS) Account: The

Investor Portfolio of Securities (IPS) account is
necessary for investing in MTBs. Primary
Dealers/Scheduled Banks hold MTBs in IPS accounts
on behalf of their customers. Customer is the legal
owner of the MTB held in the IPS account with banks
in accordance with instructions of SBP.
How to Open an IPS Account: All Primary Dealers

(PDs) of Government Securities, designated by State
Bank of Pakistan for each financial year are required
to offer these accounts to their customers. Any
person or entity, which has PKR denominated
account with a primary dealer or any scheduled bank
offering this facility, is entitled to open an IPS
account.
Investors are advised to contact the treasury
department of their bank or their respective branch
for the detailed guidelines for investments in the
MTBs. IPS account opening branch will provide
activity statements of IPS account to each investor on
a quarterly basis. Charges levied by banks on IPS
accounts, are explicitly mentioned in their respective
schedule of charges.
2
How to buy MTBs: After opening the IPS account,
investor can instruct its bank to buy the MTBs either
from the primary market through “non-competitive
bidding” process in regular auctions conducted by the
SBP or from the secondary market.
Primary Market: The non-competitive bidding

process allows investor to take part in the primary
auction of the MTB through Primary Dealers. The
quantum size of non-competitive bids for one
investor is linked with auction target i.e. 0.25% of the
pre-announced auction target or PKR 25 million,
whichever is higher subject to a maximum of PKR
500 million. The non-competitive bids are sent to SBP
separately from the normal bids before
commencement of primary auction time with the
name and amount of investors without quoting price.
The bids of any investor can be rejected if the
investor submits more than one bid for a single tenor.
These bids are accepted at weighted average yield in
each tenor as decided in the primary auction. In case
of over subscription, non-competitive bids are
accepted in order of lowest to highest amount or on
pro-rata basis.
Secondary Market: The investors can also buy the

MTBs through the secondary market by instructing
3
its bank to buy the MTB through the secondary
market. The prices and yields of MTBs and other
Government securities in the secondary market are
available at http://www.sbp.org.pk/ecodata/CumulativeTrdVol2.pdf
Redemption: MTBs are only redeemable at maturity.

However, any investor can sell MTBs in secondary
market through its bank. If an investor holds the MTB
till maturity, the PKR value equivalent to face value of
the MTB will be credited to the account of the
investor through its bank on the maturity of MTB.
Investment by Non-Resident Investors: Like the

local investors, foreign investors can invest in the
MTBs by opening an IPS account. Foreign investors
are also required to open a Special Convertible Rupee
Account (SCRA) with any Authorized Dealer in
Pakistan. The SCRA is opened by foreigners in
Pakistani Rupee. The amounts are credited to these
accounts after conversion of foreign currency into
Pakistani Rupee, for the purpose of investment in
Government Securities. Balance’s in these accounts
can be sent any time outside the country after
conversion into foreign currency.
4
Benefits
 Guaranteed Repayment: The repayment of face
value is guaranteed by the Government of
Pakistan.
 Investment for short term: The MTBs are

available in short-term maturity periods of 3, 6
and 12 months.
 Higher Returns: These securities provide higher

returns to the investor, as compared to most bank
deposits.
 Accepted as Collateral: MTBs are acceptable by

the banks as collateral.
 Liquidity: Highly liquid and tradable in the

secondary market.
 Easy Process of Investment: Local and foreign

investors can easily invest in the MTBs by opening
an IPS Account in any bank offering these
services. In addition to IPS account, foreign
investors also have to open a Special Convertible
Rupee Account (SCRA) with any Authorized
Dealer in Pakistan.
5
Primary Dealers
Scheduled banks, DFIs, Investment Banks and listed
brokerage houses are eligible to become a Primary
Dealer (PD) of Government Securities. Only PDs can
participate in the auction of MTBs conducted by State
Bank of Pakistan. For each financial year, State Bank of
Pakistan designates the financial institutions to work
as primary dealer of Government Securities. The list of
primary dealers for FY2019-20 is as follows:
1. Allied Bank Limited

https://www.abl.com/
2. Habib Bank Limited
http://www.hbl.com
3. National Bank of Pakistan
http://www.nbp.com.pk
4. United Bank Limited
http://www.ubldirect.com/Corporate/index.aspx
5. Pak Oman Investment Co. Ltd
http://www.pakoman.com/
6. Bank Alfalah Limited
http://www.bankalfalah.com/
7. MCB Bank Limited
http://www.mcb.com.pk/
8. JS Bank Limited
http://www.jsbl.com/
9. Standard Chartered Bank (Pakistan) Limited
http://www.sc.com/pk/
10. Faysal Bank Limited
http://www.faysalbank.com/
11. Citibank NA
http://www.citi.com/pakistan/

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MARKET TREASURY BILLS

Investor Portfolio Securities (IPS) Account: The

How to Open an IPS Account: All Primary Dealers

Primary Market: The non-competitive bidding

Secondary Market: The investors can also buy the

Redemption: MTBs are only redeemable at maturity.

Investment by Non-Resident Investors: Like the

 Investment for short term: The MTBs are

 Higher Returns: These securities provide higher

 Accepted as Collateral: MTBs are acceptable by

 Liquidity: Highly liquid and tradable in the

 Easy Process of Investment: Local and foreign

1. Allied Bank Limited

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