SBP rubbishes reports claiming deposits over Rs0.5m 'unsafe'

The State Bank of Pakistan (SBP) has categorically rejected reports claiming deposits over Rs500,000 are unsafe in the banking system and clarified that the customers' deposits are “perfectly safe”.

In a statement issued on Thursday, a spokesperson of the SBP said that certain sections of the media — on the basis of a statement given by SBP Deputy Governor Dr Inayat Hussain during the meeting of the Senate Standing Committee on Finance and Revenue — are implying as if bank deposits above Rs500,000 in the banking system are unsafe.

“It is categorically stated that the deposits are safe owing to a sound banking system in Pakistan under a robust regulatory and supervisory framework of the SBP.”

The spokesperson further said that the banking system in Pakistan is adequately capitalised, highly liquid and profitable with a low level of net non-performing loans.

‘Insurance cover’

In addition to the soundness of the banking system, Deposit Protection Corporation (DPC) has added another layer of protection by providing insurance cover of up to Rs500,000 to every depositor.

This is in line with the best international practices and global trends, the spokesperson said, adding that the deposit protection, was one of the key elements of the safety net used by supervisory authorities and deposit protection agencies around the world to provide protection to the depositors' funds in the unlikely event of a bank failure.

The amount insured by the DPC becomes immediately available to depositors in case a bank fails, the Central Bank added.

Nevertheless, the remaining amounts of the deposits are also recoverable as the troubled bank is resolved through a regulatory-assisted process.

Currently, 94% of the depositors are fully protected under the Deposit Protection Act of 2016, added the spokesperson.