Depositors protection fund depleted

HARARE - The Deposit Protection Corporation (DPC) is seeking $52 million from financial institutions to boost its Fund — created to reimburse depositors when a bank collapses.

The Fund currently has only $14 million, a far cry from the stipulated $76 million, equivalent to two percent of banks’ total deposits.

“We are appealing to banks to continue paying their monthly premiums so that we can build this fund,” said DPC chief executive, John Chikura.

He said banks would soon be required to increase their monthly premiums from $500 per month to $1 000 to boost the Fund.

“This is a cost for building confidence in the sector because at the moment people have lost assurance in banks,” he said, adding that “…to bring back that confidence and harness between $4 billion to $7 billion circulating outside banks, we have to build the Fund first”.

The DPC — an autonomous statutory body established under the Banking Act Chapter 24:20, to administer the Deposit Protection Fund — was formed in 2003 to provide deposit insurance to depositors in registered deposit-taking institutions including commercial banks, merchant banks, finance houses, discount houses, and building societies.

Establishment of the Fund was a government policy response to a growing need to moderate instability in the banking sector and to protect the banking public, especially small depositors against the worst effects of bank failure.

The Fund offers limited coverage and guarantees that small depositors will be paid in full up to the insured amount in the event of a bank collapse.

Currently, the prescribed maximum deposit compensation covers in full 93 percent of all depositors operating accounts in contributory institutions.

Chikura noted that deposit insurance has become an integral part of the financial services sector in most parts of the world.

“We are committed to promoting depositor’s confidence in the banking system and to contributing to growth in stability and soundness in the financial sector,” he said.

“The Fund works closely with the bank supervision department of the Reserve Bank. In this regard, it supports bank exit procedures by giving the supervisor greater flexibility and freedom to let problem banks fail,” added Chikura.

In terms of section 37 of the Deposit Protection Corporation Act [Chapter 24:29], the DPC can be appointed as the liquidator or curator of an insolvent contributory institution.

By August, DPC had paid $447 969 to depositors of three collapsed banks Genesis, Royal and Trust which had an insured total of $812 523.

Comments (1)

FOR SALE HP TONER CARTRIDGES 05A, 10A, 11A, 12A, 13A, 15A, 24A, 35A, 36A, 42A, 49A, 51A, 53A, 55A, 61A, 64A, 70A, 78A, 80A, 83A, 85A, 90A, 96A, 125A, 131A, 135A, AND MANYMORE 0772678 311

GALLERYCARTRIDGES - 9 October 2014

Post a comment

Readers are kindly requested to refrain from using abusive, vulgar, racist, tribalistic, sexist, discriminatory and hurtful language when posting their comments on the Daily News website.
Those who transgress this civilised etiquette will be barred from contributing to our online discussions.
- Editor

Your email address will not be shared.