Bank deposits touch all-time high of Rs20 trillion in FY21

Shahnawaz Akhter Web Editor

14th Oct, 2021. 06:19 pm

The data showed the import of goods for the quarter July-September 2021/22 at $17.47 billion, while the Pakistan Bureau of Statistics (PBS) revealed that the import bill of the country was $18.74 billion for the quarter under review. Photo: File

KARACHI: The number of depositors covered under the protection offered by the Deposit Protection Corporation (DPC) of the State Bank of Pakistan (SBP) has increased due to healthy growth trend in the bank deposits, which further swelled and reached an all-time high of Rs20 trillion in FY21.

In this regard, the corporation issued its first annual report on Thursday. The report highlighted the significant developments made in the areas of deposit protection framework, corporate governance and public awareness, and also includes the financial statement of the corporation for FY2021.

The core responsibility of the DPC is to compensate the depositors for their losses in the event of a bank failure, as provided in the Deposit Protection Corporation Act, 2016.

The coverage provided by the corporation mainly covers small depositors. As of December 31, 2020, 98.9 per cent of the total depositors of conventional banking and 98.5 per cent of the Islamic banking depositors are eligible for deposit protection from DPC in case their bank is declared to have failed by the SBP.

In terms of the overall volume of deposits as of December 31, 2020, 18 per cent of conventional banking eligible deposits and 13 per cent of Islamic banking eligible deposits are fully protected.

The annual report has been issued on the back of enhancement of coverage amount to Rs500,000/depositor/bank from Rs250,000 prevalent earlier.

This 100 per cent increase in the coverage amount is expected to benefit individual depositors and has also resulted in increased number of fully protected depositors.

The better coverage to depositors is expected to further enhance the depositors’ trust in the country’s financial system to contribute more towards strengthening the financial stability.

As the concept of explicit and limited deposit protection is still novel in Pakistan, the report tries to educate the readers with the basic ideas about deposit protection. It sensitises its readers on the concepts of single depositor view (SDV) and fixed rate and risk-based premium systems.

Additionally, the report provides statistics about the coverage of deposits and premium collection and also highlights the risk management framework at DPC.

The corporation plans to make such reports a regular annual feature; henceforth, to regularly disseminate information on its developments and performance to public and other relevant stakeholders.

Importantly, detailed Frequently Asked Questions (FAQs) are also part of the report for easy understanding of the deposit protection mechanism. Being the first such report issued by the corporation, it attempts to cover all substantial developments since commencement of its business in June 2018.

According to the Deposit Protection Corporation Act, 2016, all 33 scheduled banks in Pakistan are member banks of the deposit protection scheme under DPC. Of the total 33 member banks, there are four foreign banks, four specialised banks, 20 private sector banks and five public sector banks.

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