On Wednesday, the Senate Standing Committee on Finance approved two key bills in line with the conditions of the IMF program.
The bills, the Banking Companies Amendment Bill, 2024, and the Deposit Protection Corporation Amendment Bill, 2024, include a significant change in depositor protection, raising the coverage limit from Rs250,000 to Rs500,000. The committee, led by Senator Saleem Mandviwalla, convened at the Parliament House to review and pass the Deposit Protection Corporation Amendment Bill, 2024. Deputy Governor of the State Bank, Dr. Inayat Hussain, provided an in-depth briefing on the bill.
The new amendment guarantees legal protection for deposits up to Rs500,000, doubling the previous limit of Rs250,000. Dr. Hussain mentioned that although microfinance banks are not currently covered by the bill, future amendments might include them. He also noted that the IMF had pushed for enhanced depositor protection. Additionally, Dr. Hussain disclosed that State Bank board members earn Rs75,000 per meeting, while other banks charge fees exceeding Rs50,000.
Senator Mohsin Aziz pointed out that such financial incentives make banking sector jobs more attractive. The committee also reviewed The Banking Companies (Amendment) Bill, 2024, which includes provisions related to Islamic banking. Dr. Hussain highlighted that Islamic banking in Pakistan operates under stricter regulations compared to global standards and mentioned that the IMF has recommended a unified regulatory framework for commercial and microfinance banks by December.
Senator Mandviwala expressed concerns about foreign joint investment companies investing in government securities and urged the finance ministry to address this issue. He also suggested a ban on such investments to avoid external influence on domestic markets.
The committee further discussed issues within Islamic banking, with Chairman Mandviwala alleging that profit rates in Islamic banking might be higher than those in conventional banking. He requested a detailed briefing from the State Bank on Islamic banking practices. The meeting concluded with a call for increased transparency and regulatory oversight in the Islamic banking sector.
