Every few weeks, the Government of Pakistan borrows hundreds of billions of rupees by auctioning Treasury bills and Pakistan Investment Bonds through the State Bank. Banks, mutual funds, and insurance companies park enormous sums in these instruments — earning the "risk-free" yield your bank pays you only a fraction of. What most retail investors do not realise is that you can buy these exact securities yourself, through an IPS account at an ordinary commercial bank. This guide covers what T-bills and PIBs are, how auctions work, how to open an IPS account, the taxes — and when to skip the whole exercise and use a money market fund instead.
Market Treasury Bills (T-bills) are short-term government debt issued in 3-month, 6-month, and 12-month tenors. They are zero-coupon instruments, sold at a discount to face value: you might pay roughly Rs. 97,200 today for a bill that repays Rs. 100,000 in three months — the difference, annualised, is the quoted yield. Short maturity plus a federal-government issuer makes T-bills the closest thing to a pure "risk-free rate" in the rupee market.
Pakistan Investment Bonds (PIBs) are the long-term sibling, issued in tenors from 2 to 30 years in two main flavours: fixed-rate PIBs, paying a coupon set at auction every six months until maturity, and floating-rate PIBs, whose coupon resets periodically against a short-term benchmark. A fixed-rate PIB freezes today's yield for a decade; a floater stays aligned with wherever rates go next.
Both are direct obligations of the Government of Pakistan, issued and settled through the State Bank. In rupee terms there is no stronger credit — the government that prints the currency is the borrower. They are not risk-free in every sense (inflation and reinvestment risk are covered below), but default risk on rupee government paper is as low as it gets in Pakistan.
T-bill and PIB yields are discovered at auction, but they orbit one number: the SBP policy rate, currently 11.5% and holding as of June 2026. Short T-bill yields rarely stray far from it. The SBP publishes cut-off yields for every auction on sbp.org.pk — the best free signal of where the market thinks rates are heading: 12-month bills clearing below the policy rate means cuts are priced in; above it, hikes.
This matters enormously for which tenor you choose. Pakistan has just lived through a historic cutting cycle — from 22% in 2023 to 11.5% today. Anyone rolling 3-month T-bills watched their reinvestment yield shrink at every maturity; anyone who locked a long fixed-rate PIB near the peak is still collecting coupons set in a 20%+ world. The lesson:
With the SBP pausing after 1,050 basis points of cuts, the 2026 debate is whether more easing is coming. If so, the window to lock double-digit government yields is narrowing — the same logic covered in our SBP policy rate guide.
Government securities in Pakistan exist in scripless, book-entry form — there is no paper certificate. Institutions hold them at the SBP; retail investors hold them through an Investor Portfolio of Securities (IPS) account at a commercial bank. The bank acts as custodian: securities are recorded in your name, segregated from the bank's own holdings. That matters — your T-bills are your property, not a deposit liability, so they do not depend on the bank's solvency.
Most large commercial banks offer IPS accounts — HBL, UBL, Standard Chartered, and Bank Alfalah are commonly cited examples, while Meezan Bank offers the equivalent for Shariah-compliant Government Ijara Sukuk rather than conventional interest-bearing bills. Availability, minimums, and fees vary, so ask your own bank first.
Opening requirements are similar everywhere:
Account opening is typically free or nominal, but many banks levy small custody or transaction fees on IPS holdings. Get the fee schedule in writing — on small balances, fees can quietly eat a noticeable slice of your yield.
There are two ways to acquire government securities, and your bank handles both through the same IPS account.
The SBP conducts auctions on a published calendar — T-bill auctions typically fortnightly, PIB auctions roughly monthly, with the schedule and results on sbp.org.pk. Only designated Primary Dealer banks bid directly; your bank submits your bid as your agent. Retail investors almost always use a non-competitive bid: you specify the amount and tenor, not the yield, and receive securities at the weighted-average yield of accepted competitive bids — no risk of mispricing.
Banks also sell securities from their own books or source them in the interbank market — useful for a specific maturity date or buying between auctions. The price reflects current market yields, so an older high-coupon PIB costs more than face value when rates have fallen. Secondary pricing is less transparent, so compare the implied yield your bank quotes against recent auction cut-offs before agreeing.
Direct government securities are not the only way to earn the government yield — and for most readers they are not the best way:
| Feature | T-Bills via IPS | National Savings (CDNS) | Money Market Funds |
|---|---|---|---|
| Practical minimum | Bank-set, often Rs. 100,000+ | From Rs. 500 (e.g., SSC) | Around Rs. 1,000 |
| Current yield anchor | Auction cut-offs near the 11.5% policy rate | SSC at 11.6% (3-year lock-in) | Tracks T-bill yields minus fund fees |
| Liquidity | Sell via bank; T+ settlement, price risk on PIBs | Encashment rules and early-exit penalties vary by certificate | Redeem in ~1–2 working days at NAV |
| Effort | High — account opening, auction calendar, bid instructions | Medium — CDNS centre or agent bank visit | Low — open online with most AMCs |
| Best suited to | Larger portfolios; investors locking specific maturities | Savers wanting fixed locked-in rates; seniors and widows (Behbood) | Almost everyone parking cash short-term |
Here is the part many guides skip: a money market mutual fund is, in substance, a T-bill portfolio with a Rs. 1,000 entry ticket. These funds invest predominantly in the same short-term government paper, publish daily NAVs and yields through mufap.com.pk, and redeem within a day or two. You give up a small management fee for diversification, no auction paperwork, and instant access — for an investor deploying Rs. 50,000 or Rs. 500,000, that trade is almost always worth it. Direct IPS ownership earns its keep when amounts are large enough that fund fees outweigh the convenience, or to pin down a multi-year fixed-rate PIB before rates fall further. For locked-in rates at small ticket sizes, National Savings remains compelling too — current rates are at savings.gov.pk, compared head-to-head in our National Savings vs mutual funds guide.
Returns on government securities are taxed as profit on debt under the Income Tax Ordinance. Your bank deducts withholding tax at source, so the amount hitting your account is net of tax. Two things to know:
Capital gains on securities sold before maturity are also taxable, under different treatment. Keep your bank's transaction confirmations for return-filing time.
The defining risk of short paper in a cutting cycle. A 3-month T-bill bought today near 11.5% matures in September — if the SBP has cut by then, you reinvest at less. Rolling short bills from 2023 onward meant repricing down from 22% toward 11.5%, a halving of income on the same capital. For dependable long-term income, fixed-rate PIBs or locked CDNS certificates address exactly this.
A fixed-rate PIB held to maturity pays its face value, full stop. Sold early, it fetches whatever the market will pay — and when yields rise, prices of existing fixed-rate bonds fall, with longer maturities swinging hardest. Anyone who bought 10-year PIBs in 2021 at single-digit coupons and needed cash in 2023, with the policy rate at 22%, faced painful losses. Only commit to long tenors money you will not need early; floating-rate PIBs sidestep most of this risk.
Government paper protects your rupees, not your purchasing power. Today the math is favourable: an 11.5% nominal anchor against 7.0% CPI inflation is roughly +4.5% real. But in 2022–23, inflation ran far above even a 22% policy rate for stretches, and "risk-free" savers lost real value every month. A locked 10-year coupon that looks generous today could look thin if inflation re-accelerates — the core argument for holding some real assets such as equities, as discussed in our mutual fund investing guide.