Parly raps DPC

said the corporation does not have capacity to compensate all depositors if bigger banks or a number of them failed at the same time.
He said this after the Parliamentary Portifolio Committee on Budget and Finance took the corporation’s management to task on why they could not detect problems at Interfin Banking Corporation and Genesis Investment Bank ahead of time.
Goromonzi North Member of Parliament, Cde Paddy Zhanda, chairs the committee. The committee rapped the DPC saying it should have detected the problems before the institutions ran into problems after it was given the statutory powers last year to conduct bank surveillance.
The statutory provision also provides that DPC should reimburse at least 90 percent of depositors of any failed bank.
In response DPC chief executive Mr John Chikura said that the corporation was caught unawares by the problems at the two banks.
He said they only learnt of their failure through media reports.
“It was a baptism of fire for us, that you set up today and the next day you have a (bank failure) problem,” said Mr Chikura.
But Cde Zhanda retorted, “The board is charged with implementation of policy issues not day-to-day operations. The board is not yet there, but you have not stopped paying salaries and rents, have you? “You were caught before you were ready, but the Deposit Protection Corporation Act is with you.”
Genesis surrendered its banking licence after failing to meet minimum levels while Interfin was put under curatorship when it faced serious capitalisation challenges.
Mr Chingosho said the DPC required US$55 million capitalisation in light of the present state of a number of local banks and according to information from the central bank.
“We need US$55 million capital so that we have sufficient funding to engender confidence in the public,” said Mr Chingosho.
DPC was never capitalised since creation in 2003.
DPC said, ideally, it would want to pay out US$1 000 per depositor of a failed bank, but is presently only able to pay US$150 regardless of the depositor’s balance when a bank fails.
The DPC will pay Genesis’ small depositors a total of US$12 026 and would require US$60 000 to pay Interfin depositors if the bank fails to reopen.
The bank had a total of US$131 million deposits before it was put under curatorship translating to a US$66 000 pay out at US$150 and US$1,9 million at US$1 000 per depositor.
Mr Chikura said that while Parliament empowered DPC to do surveillance the law is yet to be operationalised because Finance Minister Tendai Biti has not appointed a new board.