National Bonds Corporation is under full ownership of The Investment Corporation of Dubai, the investment arm of Dubai government. It aims to develop a unique Shari’a compliant savings culture and encourages people to save and re-invest their savings in development initiatives within the UAE. The financial products and services are tailored, regardless of the investment value, towards a sizable and diversified client base of individual customers and organizations.
With its government backed advantage, ethical nature and a relatively low-risk profile, we explore why it may be worth looking at National Bonds as a savings and investment opportunity outside of traditional banking.
National Bonds can be purchased by UAE residents as well as non-residents over 21 years of age. Individuals under 21 years can also obtain National Bonds provided they are purchased by a parent or legal guardian on behalf of the minor.
UAE residents are required to present true copy of their valid passport, residence visa as well as Emirates ID at the time of purchase. In case of minors, all the aforementioned identification documents of the applicant as well as the parent or guardian have to be presented.
For non-residents, true copy of passport, visit visa and entry stamp is required. Minor non-resident applicants and their parents or legal guardians too need to present true copy of these documents.
[Related: What’s your investment style?]
Where to buy?
You can purchase bonds at any of the 556 National Bonds retail outlets, leading exchange houses, Emirates Post offices and banks across the UAE. Additionally, you can visit the National Bonds office or get in touch with the direct sales team to purchase. To make it even simpler and accessible, National Bonds has also made online purchase possible. You can even subscribe to their customized ‘myPlan’ monthly saving mandate plans through direct debit instructions, payroll deduction or by placing a standing instruction with your bank.
Certificates for purchases made against cash and credit card are issued immediately while for those made against cheques are issued after 5 to 7 days, subject to cheque clearance.
It is worth mentioning here that there is no limit to how many bonds an individual can purchase. The minimum investment amount, however, is AED 100 which is 10 bonds in denominations of AED 10.
How to redeem?
National Bonds offers both partial and full redemption options. Instant cash redemption is only possible for amounts of up to AED 10,000. This can be done by putting in an application via SMS or online and collecting the funds at select Al Ansari Exchange and UAE Exchange branches. For amounts over AED 10,000, funds are remitted through cheque and customers have to submit their applications by calling National Bonds directly. Non-residents too need to submit their redemption applications through a direct call to National Bonds for a straightforward bank transfer of funds.
For saving certificate purchases made against cash and cheque, the minimum holding period before redemption is 30 days from the date of issuance. For purchases against credit card, however, redemptions can only be made once the lock-in period of 90 days is over.
What about the returns?
How much profit you can earn from National Bonds varies based on 3 factors – your amount of holding, period of holding as well as the frequency of Bonds purchased. Precisely, the more and longer you save, the higher is the profit rate rate you receive.
In 2018, the average annual profit rate provided by Islamic Banks in the UAE was 0.36 percent on savings account, irrespective of the amount invested. National Bonds, however, distributed a profit of 4 percent for term based investments and 3.52 percent for saving bonds of AED 350,000 plus in the same period.
The profit you receive is weighted if you dissolve your bonds before the completion of one year. This means that having held your bonds for only 3 months at the time of annual profit rate calculation entitles you to 40 percent profit weighting, between 3 and 6 months entitles you to 60 percent and between 6 and 12 months entitles you to 80 percent profit weighting.
Rewards, prizes & value-added benefits
Saving bond purchase includes value-added benefits like Life Takaful Coverage at no extra cost.
National Bonds also rewards saving behavior of its customers with loyalty bonuses and chances at winning monthly and quarterly draw prizes. In 2018 alone, the company gave away AED 37 million in prizes. Regular savers and high amount investors receive more chances and exclusive prizes.