In a recent meeting of the Senate Committee on Treasury, Deputy Governor of the State Bank, Salim Allah, highlighted the banking regulations concerning deposits. He emphasized that accounts holding up to 500,000 rupees are fully protected, providing assurance to small depositors. Allah informed the committee that if a bank faces bankruptcy, the total amount in accounts above this threshold is not guaranteed by the law.
During the session, Deputy Governor Allah revealed that a significant 94% of accounts held in the range of up to 500,000 rupees, demonstrating the widespread impact of this regulation. Only 6% of account holders maintain balances exceeding 500,000 rupees.
Furthermore, Allah informed the Senate Committee that account holders with deposits up to 500,000 rupees are eligible for protection through the Deposits Protection Corporation. This corporation operates under the State Bank of Pakistan and ensures that depositors are reimbursed in case of a bank failure, securing their investments and fostering trust in the banking system.
Chairman of the Senate Committee on Treasury, Salim Mandviwala, reiterated the Deputy Governor’s statement, emphasizing that the new regulations stipulate that only accounts holding up to 500,000 rupees are safeguarded under the law. This policy aims to protect the savings of ordinary citizens and instill confidence in the banking sector.
The move to secure smaller deposits is a significant step towards enhancing financial stability and ensuring the protection of individual savings. It not only provides security to account holders but also promotes transparency and accountability within the banking industry. This assurance from regulatory authorities is crucial in encouraging people to participate actively in the banking system, contributing to the overall economic growth and stability of the country.
The State Bank’s proactive approach, along with the legislative backing from the Senate Committee on Treasury, marks a positive stride in safeguarding the interests of the general public, setting a strong precedent for financial security and consumer protection in Pakistan’s banking sector.