Karachi, October 1, 2024 – In a significant move to fortify depositor protection, the State Bank of Pakistan (SBP) announced on Tuesday that the guarantee amount for depositors has been increased to Rs 1 million per depositor, per bank. This marks a doubling of the previous protected deposit amount, which stood at Rs 500,000.
The decision was officially communicated through an SBP notification, marking a critical enhancement in the financial safety net for depositors. This new protection will take effect from October 1, 2024, ensuring that in the event of a bank failure, eligible depositors will now be safeguarded up to Rs 1 million.
The decision is in line with the provisions of the Deposit Protection Corporation (DPC) Act 2016, under Section 7(1), which empowers the Corporation to guarantee the full payment of funds in depositor accounts up to an amount specified by the DPC. The increase from Rs 500,000 to Rs 1 million signifies a robust effort to enhance financial security and boost public confidence in the banking system.
The previous threshold of Rs 500,000 was set on September 20, 2021, under Circular Letter No. 1 of 2021, which provided depositors with a guarantee amount per depositor, per bank. This increase, according to financial experts, is a timely and prudent step, reflecting both the rising financial risks and the growing value of deposits in the country’s banking system.
In addition to the revised guarantee, banks are also required to update their “Single Depositor View” (SDV) databases to reflect the new limit of Rs 1 million. This directive, issued under DPC Circular Letter No. 01 of 2019, ensures that banks maintain accurate reporting systems for monitoring depositor information. The SDV database, which consolidates the information of individual depositors across multiple accounts, is pivotal in ensuring seamless operations and protecting depositors in the event of a bank’s insolvency.
The SBP reiterated that all other instructions issued in previous circulars concerning the Deposit Protection Mechanism and SDV will remain unchanged.
This move is expected to further strengthen Pakistan’s financial stability, providing an added layer of confidence to depositors amid fluctuating economic conditions. By enhancing the guarantee limit, the SBP is making a clear statement about its commitment to safeguarding depositors’ interests while promoting a stable and resilient banking environment.
