Online Reporter
Sikhulekelani Moyo
Zimpapers Business Hub
NEW provisions in the Deposit Protection Corporation (DPC) Amendment Bill will extend insurance cover to depositors in microfinance institutions and building societies.
Additionally, the bill mandates banks to pay out compensation within seven days, according to Parliament’s Portfolio Committee on Budget, Finance and Investment Promotion.
The committee, chaired by the MP for Chipinge East Lincoln Dliwayo, held a public hearing at Stanley Hall in Bulawayo on Tuesday as part of nationwide consultations on the Bill.
In an interview after the hearing, Mr Dliwayo said the DPC Bill is of paramount importance, as it covers issues that include the protection of depositors’ money in the banks.
Mr Dliwayo said the key change in the Bill entails the definition of a contributory institution.
“What this bill is seeking to do is extend the definition of what we call a depository institution, a contributory institution. And the contributory institution is the bank or the building society or a depository microfinance institution that contributes towards DPC,” he said.
“By extending the definition of the contributory institution, we are ensuring that more depositors are protected. Because prior to this amendment bill, depositors in microfinance institutions, depositors in building societies, were not insured.
“So, now bringing the microfinance institutions, bringing the building societies, makes sure that those deposits that are within the building societies, those deposits that are in those microfinance institutions, are also insured, such that in case of a bank failure, in case of that microfinance institution failing, then those depositors will be compensated for their loss by DPC.”
On compensation, the Bill reduces the payout period.
“That period has been reduced to seven days. Prior to this amendment bill, the period was open-ended, because the bank would challenge that time in the court of law and maybe get three or four years without compensation,” added Mr Dliwayo.
The chair said the amendments align with the National Development Strategy (NDS) 2, adding that in line with the national development strategy, one of the priorities that are spelled out under NDS2 is macroeconomic stability.
“And you cannot speak of macroeconomic stability without financial sector stability. So, the powers of the DPC, if they are enhanced, mean our financial sector is stronger, and hence it contributes towards macroeconomic stability,” said Mr Dliwayo.
He said stakeholders who attended the public hearing in Gweru raised concerns over the exchange rate to be used during compensation.
