The Deposit Protection Corporation (DPC) has raised the guarantee coverage for eligible depositors of its member banks, doubling the protected amount from PKR 500,000 to PKR 1,000,000. Effective October 1, 2024, this measure, approved by the DPC’s Board of Directors, is a significant step toward reinforcing depositors’ trust in Pakistan’s banking system. By covering deposits up to PKR 1 million, the new policy safeguards nearly 96% of eligible depositors, enhancing financial security and supporting long-term financial stability within the country.
The deposit protection scheme exists to protect depositors in the unlikely event of a bank’s failure, aiming to ensure confidence in Pakistan’s banking sector and reduce systemic risk. This increase in guarantee coverage requires no additional fees from depositors, providing automatic coverage for eligible accounts. Depositors are only eligible for compensation under the scheme if the State Bank of Pakistan (SBP) officially declares a bank to have failed; the guarantee does not extend to other circumstances, preserving its function as a protective measure rather than a general insurance policy.
The enhanced guarantee reflects DPC’s dedication to strengthening financial stability in Pakistan and aligning with international standards of deposit protection, as many countries have gradually raised coverage limits to better safeguard their banking clients. Through these changes, the DPC aims to promote public confidence in Pakistan’s financial institutions, reassuring depositors that their savings are protected even in times of economic uncertainty.
By securing deposits more comprehensively, the DPC’s updated policy benefits not only individual depositors but also the broader financial ecosystem. The increased guarantee amount is expected to play a role in bolstering consumer confidence, encouraging more people to engage with the formal banking sector, and supporting financial inclusion initiatives across Pakistan. This development aligns with the State Bank of Pakistan’s objectives of building a resilient banking sector, reflecting the ongoing efforts to enhance transparency, safeguard savings, and provide a more secure environment for Pakistan’s banking customers.