Islamabad: The Senate Standing Committee on Finance and Revenue, chaired by Senator Saleem Mandviwalla, approved significant amendments to banking legislation aimed at increasing depositor protection and regulating Islamic banking. The session, held at Parliament House, involved key discussions on the “Deposit Protection Corporation Amendment Bill, 2024” and the “Banking Companies (Amendment) Bill, 2024”.
According to Senate of Pakistan, the committee passed the “Deposit Protection Corporation Amendment Bill, 2024” after a comprehensive briefing by Dr. Inayat Hussain, Deputy Governor of the State Bank. The amendment will enhance legal protection for bank depositors, raising the coverage limit from Rs 250,000 to Rs 500,000. Although microfinance banks are currently excluded, future amendments could extend this protection. The International Monetary Fund (IMF) has supported the move, advocating for stronger depositor safeguards to bolster financial stability.
During the meeting, Dr. Hussain also highlighted the compensation for board members of the State Bank, noting a standard fee of Rs 75,000 per meeting, which is comparatively higher than other banks. This practice, as Senator Mohsin Aziz pointed out, makes banking positions highly attractive due to lucrative financial incentives.
Furthermore, the “Banking Companies (Amendment) Bill, 2024,” which includes important provisions for Islamic banking, was also examined. Dr. Hussain stressed that the regulatory framework for Islamic banking in Pakistan is stringent and well-aligned with international standards. The IMF has recommended a unified regulatory framework for all types of banking by the end of December to ensure consistency and fairness.
The committee also tackled issues related to foreign investment in government papers, with Senator Mandviwala urging the Finance Ministry to restrict such investments to minimize external influence on Pakistan’s financial markets. Concerns were raised about the higher profit rates in Islamic banking compared to conventional banking, with a request for a more detailed briefing on these practices.
Both the Deposit Protection Corporation Amendment Bill, 2024, and the Banking Companies Amendment Bill, 2024, received approval from the committee, which emphasized the need for greater transparency and regulatory oversight, particularly in the realm of Islamic banking.