KARACHI:
On Thursday, the State Bank of Pakistan (SBP) reassured the public that Pakistan’s banking system is secure and robust, citing the system’s robust capitalization, high liquidity, and profitability as reasons why it can weather even the most severe economic shocks. The Deposit Protection Act of 2016 ensures the security of deposits for a whopping 94% of depositors.
The SBP’s official dispelled recent media speculation that deposits beyond Rs500,000 were at jeopardy. The robust regulatory environment and the financially healthy banking sector, marked by good profitability, were cited as reasons for their confidence in deposit security.
In the first half of CY23, the banking sector reported profitability of Rs284 billion, showing a 125% rise compared to the same period in CY22. By June 2023, banks’ Capital Adequacy Ratios (CARs) will have risen to 17.8%, much over the SBP’s minimum regulatory norm of 11.5% and international standards of 10.2%.
The Deposit Protection Corporation (DPC) follows international standards by providing depositors with protection of up to Rs500,000 per account. In the highly improbable case of a bank failure, deposit protection is used by regulatory bodies around the world to preserve depositors’ funds. Access to protected monies is guaranteed by the DPC, and any leftover deposits can be recouped through a controlled resolution procedure.
