KARACHI: The Deposit Protection Corporation (DPC) has proposed to protect the deposits of customers of microfinance banks, which are vulnerable to any adverse financial shock.
DPC, a subsidiary of State Bank, has guaranteed full protection of deposits up to 5 lakhs to scheduled bank customers.
It should be noted that 94% of the 73 million account holders have deposits of 5 lakhs or less, scheduled banks include commercial, conventional and Sharia banks, while microfinance banks are not included.
In its annual report for 2022-23, the DPC stated that 11 microfinance banks are providing capital of Rs 520 billion with 98.2 account holders, keeping in view the fact that microfinance banks have a focus on the weak financial position of the community. There are accounts of holders, which in case of any shock can shake the political, social and economic structure of the country, it is important that their deposits are also protected.
The DPC has suggested that the coverage of microfinance banks can be extended by extending the scope of the DPC, thereby protecting the capital of millions of people.
Deposits are already protected under the Microfinance Institutions Ordinance 2001, which mandates microfinance banks to raise their own depositor protection fund from their annual profits, but the depositors have a better And it is important to provide a reliable mechanism, apart from this, DPC has also planned to extend the deposit protection scheme to digital banks.
It should be noted that the deposit protection fund of the corporation has exceeded 100 billion rupees by June 2023, the volume of the member banks of the corporation continued to increase during the fiscal year 2023 and the volume of deposits reached 25.6 thousand billion rupees by the end of June 2023. Similarly, during this period the volume of deposits eligible for protection reached Rs.14 thousand billion with an increase of Rs.1.8 thousand billion.
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