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<p>NS&I raises cost effective finance for government from the retail savings market.
It does this through offering savings products to consumers, including Premium Bonds.
Funds raised by NS&I from these products, including Premium Bonds, flow to the
National Loans Fund (NLF). The NLF is the government’s main borrowing and lending
account, and to this end, it undertakes borrowing (primarily by issuing gilts via
the Debt Management Office) and uses proceeds and other central government surplus
balances, including funds from NS&I’s Premium Bonds, to manage its cash needs
day-to-day.</p><p> </p><p>The Exchequer’s cash needs are managed on an aggregate basis,
meaning funds raised from Premium Bonds are not held in a separate account and do
not receive a separate rate of return (which in any case is determined by the market
as the government is ultimately a price taker). Therefore, there is not a single rate
of return on NS&I proceeds and it would not be possible to provide an estimate
of returns from retaining the proceeds of Premium Bonds.</p><p> </p><p>When a customer
divests their holdings of Premium Bonds, these repayments are also funded via the
NLF’s activities and are typically processed within three working days. However, in
exceptional circumstances, such as Bank Holidays, this may take longer. This process
allows HM Treasury to manage Exchequer cashflows in a cost effective manner.</p>
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