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Thursday, July 18, 2024

State Bank Assures Depositors of Safety Amid False Reports

The statement categorically affirmed that any deposits, including those exceeding Rs500,000 remain protected due to Pakistan's robust regulatory and supervisory framework.

The State Bank of Pakistan (SBP) has emphatically dismissed recent reports that suggested deposits exceeding Rs500,000 in the banking system were unsafe, firmly asserting that customers’ deposits are secure.

In an official statement released on Thursday, a spokesperson for the SBP responded to media claims, which had been based on remarks made by SBP Deputy Governor Dr. Inayat Hussain during a meeting of the Senate Standing Committee on Finance and Revenue. The spokesperson clarified that some sections of the media were giving the impression that bank deposits exceeding Rs500,000 were at risk.

The statement categorically affirmed that the deposits remain protected due to Pakistan’s robust regulatory and supervisory framework, which ensures the safety of the banking system.

The spokesperson went on to emphasize the health of the banking system in Pakistan, highlighting its sufficient capitalization, high liquidity, profitability, and a low level of net non-performing loans.

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Furthermore, the Deposit Protection Corporation (DPC) has introduced an additional layer of security by providing insurance coverage of up to Rs500,000 for each depositor, aligning with international best practices and global trends. This deposit protection is a vital element of the safety net used by supervisory authorities and deposit protection agencies worldwide to safeguard depositors’ funds in the unlikely event of a bank failure.

In the unfortunate circumstance of a bank failure, the amount insured by the DPC immediately becomes available to depositors, according to the Central Bank.

Moreover, the remaining sums of deposits can also be recovered when a distressed bank is resolved through a regulatory-assisted process.

The spokesperson concluded by highlighting that the Deposit Protection Act of 2016 ensures full protection for 94% of depositors in Pakistan, reassuring the public of the safety and security of their funds within the banking system.