KARACHI: The Deposit Protection Corporation (DPC) has increased the guarantee amount for all eligible depositors of its member banks from Rs. 500,000 to Rs. 1,000,000 with effect from October 1, 2024.

According to the SBP, this enhanced guarantee amount now provides full protection to around 96 percent of the eligible depositors. The main objective of the deposit protection scheme is to safeguard the depositors’ interest and further enhance their confidence in the banking sector. This will also support financial stability in the country.

Previously, an amount of Rs. 500,000 (rupees five hundred thousand) per depositor-per bank was determined by DPC as the guarantee amount, also referred to as protected amount, for the protection of eligible depositors.

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Under the provisions of section 7(1) of DPC Act 2016, the Corporation guarantee full payment of funds held in depositor’s account, up to an amount prescribed by the Corporation from time to time.

Now the Board of Directors of the Corporation has decided to enhance the level of protected deposit 100 percent from Rs. 500,000 (rupees five hundred thousand) to Rs. 1,000,000 (rupees one million) per depositor-per bank with effect from October 1, 2024.

Further, as per previous instructions, all banks were advised to install or update “Single Depositor View” (SDV) database. Consequent to the enhancement in the amount of protected deposit, SBP has hereby advised to the banks to use new guarantee amount in their SDV database for reporting to DPC.

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

Copyright Business Recorder, 2024