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The Deposit Protection Corporation (DPC) has increased the deposit protection cover limit per individual in all member banks to $1 000 from $500.
The Deposit Protection Fund is administered by DPC whose primary objective is to compensate depositors in part or in full for losses incurred in the event of insolvency by contributing institutions.
These can be commercial or merchant banks, building societies, finance houses and deposit-taking microfinance institutions.
In a statement, DPC chief executive officer Mr John Chikura said the new protection cover limit did not encompass depositors of financial institution that were closed prior to June 1, 2016.
“Pursuant to the provisions of section 41 (1) of the Deposit Protection Corporation Act, the public is hereby advised that the deposit protection cover limit has been increased from $500 to a maximum of $1 000 per depositor per member bank with effect from June 1, 2016,” said Mr Chikura.
“In the event of a bank failure, every client with a deposit balance equal to or below $1 000 is guaranteed to receive full compensation of the amount in the bank at the time of bank closure provided one submits a duly completed claim form.
“Any outstanding balance above the cover limit of $1 000 is payable through the liquidation process on a pro-rata basis.”
He said deposit protection was free and automatic for all bank depositors by virtue of opening a bank account with any banking institution licensed by the Reserve Bank of Zimbabwe.
Mr Chikura added that the increase in the cover limit would go a long way in protecting depositors, enhancing financial stability and public confidence in the country’s financial system. “The new cover limit will protect 93 percent of depositors by number of accounts in full in line with the corporation’s public policy objective of ensuring at least 90 percent of depositors are covered in full,” he said.
Online Reporter