The State Bank of Pakistan (SBP) has launched its Deposit Protection Corporation to safeguard bank depositors and compensate them if the bank fails to meet their obligations to customers in the country. The need for such an institution had intensified when KASB Bank’s financial health deteriorated in 2014 and subsequently its depositors faced hardships in withdrawing cash from their accounts. The central bank said the Deposit Protection Corporation has been established as a subsidiary of the State Bank of Pakistan for protection of small depositors in order to ensure financial stability of the system. The objective of the corporation is to compensate the depositors for the loss incurred by them to the extent of protected deposits in the event of failure of a member institution, it added.
