The Deposit Protection Corporation (DPC) in Pakistan is a wholly-owned subsidiary of the State Bank of Pakistan (SBP) established under the DPC Act 2016. It acts as a deposit insurer, protecting depositors' money in case a member bank fails.
Here's a more detailed breakdown:
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Purpose: The DPC's primary goal is to protect small depositors and contribute to the stability of the financial system in Pakistan.
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Establishment: It was established in response to the need for a formal deposit insurance scheme, as mandated by the DPC Act of 2016.
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Ownership: The State Bank of Pakistan (SBP), the country's central bank, fully owns the DPC. This ensures its independence and alignment with the SBP's overall mandate of financial stability.
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Function: The DPC provides deposit insurance coverage up to a certain limit, currently PKR 500,000 per depositor per bank. If a member bank fails, the DPC compensates the eligible depositors up to this protected amount.
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Membership: All scheduled banks operating in Pakistan are required to be members of the DPC.
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Funding: The DPC is funded by contributions from its member banks. These contributions are calculated based on the banks' insured deposits.
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Benefits:
- Protects Depositors: Provides a safety net for small depositors, encouraging them to keep their money in banks.
- Enhances Financial Stability: Reduces the risk of bank runs and contributes to the overall stability of the financial system.
- Promotes Confidence: Increases public confidence in the banking sector.
In essence, the DPC acts as an insurance provider for bank deposits in Pakistan, bolstering the safety and soundness of the nation's financial system.
