*The chance of winning for the priz bond holders have been decreased*

*By Syed M. Aslam*

Dec 27, 1999 - Jan 02,2000

The new prize bond scheme launched by the Central Directorate of
National Savings which discontinued the existing denominations from next year and has
replaced them with bonds of higher value which offer bigger and increased number of prizes
would help generate more revenue but will lessen holders chances of winning.

While the advertisements given by the CDNS in the print and electronics
media try to lure the prospective buyers to buy the new prize bonds by offering much
bigger and numerous prizes the fact is that the holders of new prize bonds will have much
lesser chances of winning a prize as new series will have a million bonds compared to
100,000 in the abolished scheme.

For instance, the Rs 100 prize bond has been abolished and is replaced
by a Rs 200 series. The CDNS which generated Rs 10 million from a singular Rs 100 prize
bond series earlier will now generate Rs 200 million from the Rs 200 bonds each series of
which will contain a million bonds. The chances of winning thus has been reduced from one
in 100,000 to one in one million, a fact which is not advertised by the CDNS.

While the CDNS will generate a twenty-fold revenue by doubling the
value of Rs 100 prize bond to Rs 200 from Rs 10 million to Rs 200 million from a single
series the value of prizes on the new series will increase by just ten-fold at the cost of
the buyers. This could be better understood from the following analysis.

The old 100,000 number series of Rs 100 prize bond generated a revenue
of Rs 10 million. The total pay-off for each draw totalled Rs 300,000 which included a
first prize of Rs 100,000, four second prizes of Rs 5,000 each and 300 third prizes of Rs
600 each. The total pay-off as percentage of revenue generated on the old series of Rs 100
prize bonds thus translated into 3 per cent.

However, the total pay-off as percentage of revenue generated from the
new series of Rs 200 prize bonds would be cut by half to 1.5 per cent. The new series of
Rs 200 prize bond containing one million numbers would fetch CDNS Rs 200 million in
revenue while the total pay-off per draw will add up to Rs 3 million— a first prize
of Rs 500,000; five second prizes of Rs 250,000 each; and 1,250 third prizes of Rs 1,000
each.