Shocking news for people having more than 5 lakhs in Banks
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The State Bank of Pakistan (SBP) has recently unveiled the extent of legal protection afforded to deposits held in commercial banks, as reported by ARY News. During a briefing before the Senate Standing Committee on Finance and Revenue regarding the Deposits Protection Corporation (DPC), SBP Deputy Governor Inayat Hussain disclosed that depositors' funds are legally safeguarded up to the value of Rs 500,000. However, he issued a cautionary note, stating that should a bank face insolvency, depositors with balances exceeding Rs 500,000 in their accounts would not be guaranteed compensation.
It is essential to note that the vast majority of account holders in Pakistan are covered by the Deposits Protection Corporation (DPC), as Inayat Hussain revealed that 94% of account holders maintain deposits of less than Rs 0.5 million, while only 6% possess deposits surpassing this threshold.
To sustain its operations, the DPC relies on annual subscription fees collected from banks. Furthermore, Inayat Hussain emphasized that all scheduled banks operating in the country are mandated to be members of the DPC, ensuring that deposits within these institutions fall under the protective umbrella of the deposit protection mechanism.
Regarding the challenge faced by Politically Exposed Persons (PEP) when opening accounts, SBP officials explained that each bank has appointed a focal person to facilitate PEP during the account opening procedures. Additionally, the SBP has designated a focal person within the institution to address queries related to account opening. SBP has also issued directives to banks to expedite these procedures, thereby streamlining the account opening process for PEP.
In summary, the State Bank of Pakistan has outlined the legal protection of deposits in commercial banks, emphasizing the Rs 500,000 threshold and the importance of membership in the Deposits Protection Corporation.
Furthermore, measures have been taken to alleviate the account opening challenges faced by Politically Exposed Persons, including the appointment of focal persons and streamlined procedures. These developments contribute to the overall financial security and accessibility of banking services in Pakistan.
