adminTHE Deposit Protection Corporation is proposing a raft of measures designed to hike payouts given to depositors of failed financial institutions to $1 200 and to reduce the time that payments are made to seven days in line with international best practices.
Africa Moyo – Business Reporter
The DPC Act stipulates that payouts, whose maximum amount is pegged at US$500, can only begin within three months of the closure of a contributory institution.
Delays in paying out depositors are because DPC’s appointment as a liquidator is still subject to confirmation by the courts.
The proposed amendments have since been submitted to the Ministry of Finance.
Last week, DPC chief executive officer Mr John Chikura said it was critical that the organisation’s operations conform to best practices for deposit insurance as indicated by the International Association of Deposit Insurers (IADI) in liaison with other standards bodies such as the Financial Services Board (FSB), the IMF and World Bank.
“In terms of the joint IADI and Basel Core Principle (CP) 2, the DPC should be empowered to obtain timely, accurate and comprehensive information necessary to competently fulfil its mandate and public policy objectives, directly if necessary, from member institutions irrespective of any confidentiality rules,” said Mr Chikura.
Mr Chikura said that will ensure the DPC closely monitors financially distressed financial institutions.
The DPC is also engaging banks to increase payouts to affected depositors to about US$1 200 from the US$500.
Financial institutions contribute quarterly premiums of 0,2 percent of deposits eligible for cover.
Mr Chikaura said as at February 28 this year, 88,1 percent of the depositors were fully covered at a cover level of $500.
By the end of February 2015, seven contributory institutions (CIs) were on the watch list, including Tetrad Investment Bank.
Five of the institutions – Allied Bank, Trust Bank, AfrAsia Zimbabwe Holdings, Capital Bank and Interfin Merchant Bank – have since closed.
“As at 28 February 2015, DPC’s total exposure to all CIs was US$143,7million.
Exposure to closed banks and those on the watch list category amounted to US$43,7 million; US$37,6 million to CIs on the watch list and US$20,3 million to distressed CIs,” explained Mr Chikura.
As at December 31 2014, the size of the Deposit Protection Fund was US$7,2 million after providing for banks that collapsed since December 2014.
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