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John Chikura

Business Reporter

THE Deposit Protection Corporation says the deposit insurance fund has grown to over $15 million and is sufficient to cover risk of prejudice to small depositors in the event of bank failure. Chief executive Mr John Chikura said DPC had nothing in reserve for deposit insurance at dollarisation in 2009, but it now has in place a fund enough to cover all risks.Mr Chikura said the fund has grown in leaps and bounds, starting from scratch after savings were all wiped out by inflation while Zimbabwe adopted new currency system in early 2009.

“We have reached a stage where we can now talk of a fund of about $15 million to $16 million.

“Depositors can put their money in any bank and go home to sleep knowing their money is safe,” he said.

“We have been able to build the fund slowly since dollarisation in 2009. We have built the fund from scratch, as you know DPC has never been given budgetary allocation,” Mr Chikura said.

DPC gets its funding from quarterly premium levies collected from members.

Currently the prescribed annual premium rate is 0,2 percent of average eligible deposits paid on a quarterly basis.

In terms of its policy target and mandate, the deposit insurer, which is established by an Act of Parliament, is expected to provide cover for a minimum of 90 percent of all depositors.

DPC has doubled the amount payable to small depositors, from the previous maximum of $500 to $1 000 per depositor per institution, however applicable to new cases of bank failure.

An amount of $250 is also payable to clients of failed deposit-taking micro-finance institutions.

A total of seven failed banks are currently in resolution with some depositors having been paid part of their dues.

Mr Chikura said the majority of remaining banks are strong and in good shape.

Given this scenario, Mr Chikura said DPC is now in much better position to pay more to the depositors of banks that might fail in future given the significant amount of funds it has in reserve.

“Seven banks are in resolution and only a couple have some issues, but that is not big enough to cause systemic risk. If there are problems we can pay off and still be okay,” he said.

DPC is in the process of resolving liquidation of Allied Bank, AfrAsia, Interfin Bank, Time Bank, Royal Bank, Trust Bank and Tetrad Investment Bank and paying approved claims of depositors.

“Going forward, what we have (in terms of the fund) is enough to deal with any bank failure.”

Deposit protection is a scheme established by Government to protect depositors against the loss of their insured deposits placed with member institutions licenced to operate banks.