A Government Bill.  It is observed that banking system in Pakistan has increasingly come to the fold of private sector and at the moment, the share of public sector banking is merely 19%. There is an implicit expectation by the depositors that in case of failure of a bank, the SBP and the Federal Govt. will protect the deposit holder, esp. the small one. Such an implicit generalized government guarantee is not compatible with market based banking system mainly run by the private sector. It is observed that present system of implicit deposit protection creates a moral hazard. It is therefore necessary to establish Deposit Protection Corporation as a subsidiary of the SBP for instituting an explicit deposit insurance scheme to provide an integral safety net tool for the safety of esp. the small depositors.