KARACHI: In a significant milestone reflecting robust financial health, the Deposit Protection Fund (DPF), managed by the Deposit Protection Corporation (DPC), witnessed an impressive 48 percent growth, climbing to Rs 148 billion by the end of fiscal year 2024.
The DPC unveiled its fourth annual report for FY24 on Friday, offering a detailed graphical overview of total and eligible deposits, as well as the coverage ratio for banks’ depositors. The report underscores the Corporation’s financial resilience and its pivotal role in safeguarding depositors’ interests across the banking sector.
According to a report during FY24 total income of the DPC has increased by a substantial amount of R 48 billion, which includes Rs 26 billion, earned through a prudently managed investment portfolio, and Rs 22 billion, collected through premium receipts from member banks. Private sector banks contributed Rs 19.6 billion, while public sector banks contributed Rs 2.4 billion. As a result, the Corporation’s DPF has reached a total Rs 148 billion level at the end of last fiscal year.
Deposit protection: guarantee amount doubled to Rs1mn from Rs500,000
As of June 30, 2024, there exist 79.2 million depositors of scheduled banks, out of which more than 78.3 million, equivalent to 98.9 percent, are eligible depositors and their deposits are protected up to the extent of the protected deposit amount as specified by the Corporation. In terms of value, 51.3 percent of total conventional banking deposits and 63.4 percent of Islamic banking deposits are eligible for deposit protection in the unlikely event of a bank failure.
Domestic deposits held by member banks of the Corporation surpassed Rs 31 trillion including Rs 23.8 trillion of conventional banking and Rs 7.4 trillion of Islamic banking deposits at the end of FY24.
The report mentioned that DPC has disbursed a total of Rs 287.2 million to the eligible depositors of SME Bank by end of FY24, which was declared as a failed institution on by the State Bank of Pakistan, effective from March 27, 2023, in accordance with Section 21 of the DPC Act, 2016.
The reimbursement process for SME Bank has shown substantial progress so far, reflecting DPC efforts to compensate the majority of the protected deposits and mitigating the impact of bank failure on the eligible depositors. More than 92 percent of SME Banks’ protected deposits have been paid out so far.
The annual report illustrates key features of the deposit protection scheme and its targeted awareness campaigns and informative sessions conducted in various regions of the country. A comprehensive financial review with comparative analyses spanning five years, along with auditor’s report and audited financial statements for 2023-24 have also been disclosed.
DPC was established under the Deposit Protection Corporation Act, 2016 and operates as a subsidiary of the State Bank of Pakistan (SBP) with the mandate to compensate banks’ depositors in the unlikely event of any bank failure as and when notified by the SBP.
Fully-protected depositors are those with balances below or equal to the coverage limit of Rs 500,000, therefore, the statistics implies that in the event of a bank failure, fully protected depositors would be reimbursed in full. For those with balances exceeding Rs 500,000, the coverage limit applies, with the excess amount of the deposits recoverable through a regulatory assisted process.
Copyright Business Recorder, 2024
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