The Deposit Protection Corporation (DPC), a subsidiary of State of Bank of Pakistan has commenced its business with effect from 1st June, 2018 to protect the interest of small depositors. The objective of this corporation is to compensate fully or partially the depositors for losses incurred in the event of failure of a member financial institution.
In consultation with various stakeholders, SBP developed draft of Deposit Protection Corporation (DPC) Act in 2016 in the light of Core Principles for Effective Deposit Insurance Systems as propounded by International Association of Deposit Insurers (IADI).
Consequent upon the promulgation of said DPC Act, 2016 (the Act), the Deposit Protection Corporation has been established as a subsidiary of State Bank of Pakistan for protection of small depositors in order to ensure financial stability of the system.
The objective of the Corporation as enshrined in Section 5 of the Act is "to compensate the depositors for losses incurred by them to the extent of protected deposits in the event of failure of a member institution, as notified by State Bank of Pakistan under sub-section (1) of Section 21."
In this backdrop, the SBP has announced that the Deposit Protection Corporation has commenced its business with effect from Saturday 1st June, 2018. Further, in terms of Section 33 and 7(4) of DPC Act, Deposit Protection Regulations for banks and guaranteed amount will be communicated in due course.
It may be mentioned, in pursuance of the said Act of 2016, and in the light of Federal Government notification, the board of director of DPC has already been appointed and Jameel Ahmed, deputy governor SBP, was appointed as chairman Board of Directors of DPC.
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