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Coronavirus
LOW Source: covid.gov.pk
Pakistan Deaths
28,753
824hr
Pakistan Cases
1,286,022
39124hr
0.89% positivity
Sindh
476,233
Punjab
443,310
Balochistan
33,491
Islamabad
107,811
KPK
180,194

KARACHI: The Deposit Protection Corporation (DPC) has announced enhancement in the guarantee amount for all eligible depositors of the bank by 100 percent, ie, to Rs0.5 million. With this move some 95 percent of the eligible depositors are now fully protected.

The objective of the DPC is to compensate the small and financially unsophisticated depositors to the extent of protected deposits in the unlikely event of a bank failure.

Previously, an amount of Rs250,000 per depositor per bank was determined by DPC as the guarantee amount, also referred to as protected amount or protected deposit, for the protection of eligible depositors.

In order to enhance depositors’ confidence and support financial stability, the board members of the corporation, in their meeting held earlier this month, has decided to increase the guarantee amount 100 percent.

DPC has decided to enhance the level of protected deposit from Rs. 250,000 (Rupees Two Hundred and Fifty Thousand) to up to Rs. 500,000 (Rupees Five Hundred Thousand) per depositor-per bank with immediate effect. All banks are advised to bring these changes into the notice of their staff and depositors on priority basis.

This enhanced guarantee amount now provides full protection up to 95 percent of the eligible depositors. The main objective of the deposit protection scheme is to safeguard depositors’ interest and further enhance their trust in the country’s banking sector.

SBP launches deposit protection mechanism for banking companies

Deposit protection facility is applicable to all the eligible depositors and does not require any further subscription or registration of depositors. The guarantee amount or protected deposit becomes payable to eligible depositors only if the State Bank of Pakistan (SBP) declares a bank as a failed bank and is not payable under any other circumstances.

In addition, all banks were advised to install/update “Single Depositor View” (SDV) database. Consequent to the enhancement in the amount of protected deposit, banks are advised to use new guarantee amount in their SDV database for future reporting.

DPC is a wholly-owned subsidiary of the SBP established under the DPC Act 2016. The corporation commenced its business with effect from June 01-2018.

The DPS is playing a key role in promoting financial stability by sustaining confidence in the banking system. It is being governed by an independent and professional board of directors under the Chairmanship of Deputy Governor of SBP.

All banks scheduled under subsection (2) of section 37 of the State Bank of Pakistan Act, 1956 (XXXIII of 1956), unless exempted or excluded by the Board, shall compulsorily be member institutions of the Corporation and liable to pay the prescribed premium. DPC collects premiums from member institutions as empowered by the DPC Act 2016 and managed the received funds separately for both Islamic and conventional premium.

The DPC steps forwards in the unlikely event of bank failure as notified by the SBP and compensate its depositors up to the amount as prescribed within 30 days after the notification after adopting the approved procedure of reimbursement.

Copyright Business Recorder, 2021

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