National Bonds Corporation has lowered its threshold for entry to the savings scheme and revamped its prize structure in a bid to attract more blue collar workers.
It has lowered its minimum purchase of bonds from Dh3,000 (US$816) to Dh100.
The shake-up of its rewards will offer customers daily cash giveaways of Dh50 every minute, as well as two BMW cars, two gold bars and payment of two tuition fees every month. The existing monthly prize of Dh1 million remains.
The announcement yesterday came on the same day as Network International, the Dubai-based vendor of card-reading equipment, said it was providing a new line in prepaid cards aimed at blue collar workers.
"There are four million employees in the country, 75 per cent of whom earn around Dh1,000 a month.
"It's a sector we felt was always neglected," said Mohammed Al Ali, the chief executive of National Bonds, a Sharia-compliant saving scheme 100 per cent owned by Investment Corporation of Dubai, the investment arm of the Dubai Government.
"When we started National Bonds the minimum subscription was Dh100 and when we increased to Dh3,000 we realised we isolated small savers."
He pointed to research showing, despite their modest earnings, labourers in the UAE retained 40 or 50 per cent of their earnings here after sending the remainder to their home country.
The move comes against a backdrop of intensifying competition to manage the savings of workers in the UAE. Banks have been beefing up their wealth management businesses, while specialist financial planners have also grown their presence.
"Lowering the minimum purchase of bonds makes sense as after the introduction of the wages protection scheme by the government many labourers now have bank accounts and are becoming more savvy about savings, even if it's putting Dh100 away here or there," said Keren Bobker, the senior partner in Dubai at Holborn Assets, a financial advisory firm.
National Bonds offered a return to customers of 1.5 per cent last year, lower than the annualised rate of return of 5.6 per cent since its launch in March 2006. The Dh5.5 billion funds from more than 700,000 customers are invested in various sectors including Islamic corporate bonds, private equity and property, said Mr Al Ali. The investments were reviewed on an annual basis, he said.
The new rewards structure, which will become effective on May 1, is also aimed at luring more female and younger savers. Children can own National Bonds provided the bonds are purchased by a parent.
Of the 1,440 daily cash awards, 200 would be reserved for minor bondholders, 200 for female bondholders and 200 for those bondholders who save regularly through a direct debit arrangement through their banks or employers.
Mr Al Ali said National Bonds was also focusing on encouraging employers to sign up to its employee saving scheme, whereby workers save a portion of their salary every month. "Through the new system, we aim to link the awards offered to our customers' aspirations in life."
The Dh46m overall size of the prize funds remains unchanged.