Dubai: National Bonds Corporation, a year-old Dubai company with top corporate shareholders, launched a national savings plan on Monday aimed at luring thousands of UAE residents with a promise to make one subscriber a millionaire every month.

The company, equally owned by Dubai Holding, Emaar Properties and Dubai Bank, said its National Bonds scheme was patterned along similar programmes in Ireland, New Zealand and the UK, where funds raised from Premium Bonds exceed £20 billion.

Nasser bin Hassan Al Shaikh, National Bond's vice-chairman and CEO, told a news conference there was evidence of a shortage of alternative savings schemes in the UAE and expatriates continued to remit money home.

Each bond in the Sharia compliant scheme, which opens on March 18, will be priced at Dh10 and a minimum purchase of Dh100 is required.

Bondholders will be entitled to win cash prizes of Dh4 million in monthly draws including the top prize of Dh1 million.

The bonds have a one-month lock-in and 10 per cent of the profits earned from the funds collected will be distributed at year-end as dividends.

While the bonds themselves carry no capital guarantee, National Bonds, which has an equity of Dh150 million, is committed to buying back the certificates at face value any time, Shaikh said.

"With the UAE economy continuing to boom and the expatriate workforce continuing to grow, it is anticipated that National Bonds will fulfil some of the demand for more diverse savings opportunities," he said.

Funds raised from the scheme, aimed at the mass retail market, will be managed by a three-member investment committee headed by Dubai Bank chief executive Ziad Makkawi. The committee will also include independent members.

Makkawi said the asset allocation in the fund had not been decided yet but it would be spread over Islamic bonds, shares and other Islamic instruments like murabahas with safety of investments being the prime concern.

He said most of the funds will be invested in the UAE but he did not rule out going outside "where the opportunities are".

Makkawi said the UAE was flush with liquidity which had resulted in asset price inflation and National Bonds was a good vehicle to mop up savings.

He denied that the bonds were meant to plug liquidity shortfalls in companies that were shareholders but such bonds have traditionally been used as government borrowings.

Shaikh said the company will strive to be transparent and disclose its investments and earnings at year-end, but declined to say how much the company expected to mobilise.

Sharia-compliant product

The National Bonds will enable small investors to save while participating in the monthly lottery. The certificates may be used as gifts and may change hands unconditionally.

Do I receive interest on my National Bonds?

No, there is no interest on the bonds as this is a Sharia compliant product. At the end of the financial year, profits earned by National Bonds Corporation will be determined and 10 per cent of this amount will be redistributed among bond holders.

Who can buy National Bonds?

Anyone can purchase National Bonds. However, the minimum age required to purchase National Bonds is 16.

Where can I buy National Bonds?

National Bonds can be purchased online at www.nationalbonds.ae, or by applying by mail, and at the following banks and exchange houses:

- Emirates Islamic Bank

- Al Ansari Exchange

- Al Ghurair Exchange

- Thomas Cook Al Rostamani Exchange Company

- UAE Exchange Centre

- For more details visit www.nationalbonds.ae or call toll free 800 BONDS (800 26637).

How many National Bonds prizes are there?

There are 16,318 prizes to given away every month. The total value of these prizes is Dh4 million.

Can National Bonds be held jointly or transferred?

National Bonds cannot be held jointly and are not transferable.

When are the draws?

From May 6 the draws will take place on the first Saturday of every month at the Dubai Financial Market at 7pm. The draw is open to the public.

How do I redeem my National Bonds?

Redemption forms are available at distribution outlets or can be downloaded from the website, www.nationalbonds.ae. They should be mailed, along with the National Bond certificate(s) to be redeemed, to National Bonds Corp, P.O.Box: 113388, Dubai.

Do I have a minimum holding period before I can redeem my National Bonds?

Yes, bonds must be held for a minimum of 30 days from the date of issue before they can be redeemed. This restriction, however, does not apply to those bonds that are issued as prizes or as profit distribution.