DPC raises maximum cover limit to $120 000
The Deposit Protection Corporation (DPC) has with immediate effect made an upward review of the deposit protection cover level to a maximum of $120 000 from $10 000 in line with prevailing macro-economic conditions.
DPC chief executive, Vusi Vuma, said the increase in the deposit protection cover level will go a long way in enhancing financial stability and public confidence in the country’s financial system.
“Pursuant to the provisions of section 5 (f) of the Deposit Protection Corporation Act (Chapter 24:29), the public is hereby advised that with immediate effect, the deposit protection cover level has been increased from $10 000 to a maximum of $120 000 per deposit class per banking institution, and from $500 to a maximum of $5 000 per deposit class per deposit taking microfinance institution,” he said.
The Deposit Protection Fund is established under Section 13 of the Deposit Protection Corporation Act (Chapter 24:29). The primary objective of the fund is to compensate depositors in full or in part, for losses incurred in the event of closure of a contributory institution and the Fund is vested and administered by the DPC.
Mr Vuma said the reviewed cover levels ensure that every depositor with a deposit balance equal or below the specified cover level will receive full compensation from the Deposit Protection Fund.
He said for any outstanding balance, the specified cover level is payable through the liquidation process on a pro-rata basis, thus for the avoidance of doubt, the new cover level has no retrospective effect, hence will apply prospectively.
The DPC last year received US$400 000 from the Government through Kuvimba Mining House for the compensation of small depositors for the loss of value incurred due to the exchange rate movement as at 20 February 2019.
In November 2020, Finance and Economic Development Minister Mthuli Ncube announced that the Government would compensate small and vulnerable depositors who had balances of US$1 000 and below for the loss of value incurred during the exchange rate movement from US$1:RTGS$1 to US$1:RTGS$2.5 as at 20 February 2019, with resources equivalent to US$75 million.
The initial tranche of US$400 000 according to Mr Vuma would be allocated to eligible depositors who had funds in the Deposit Taking Microfinance Institutions (DTMFIs) whose depositors will receive compensation to the full extent of their respective loss of value.
The DPC has over the years compensated various depositors of failed banking institutions. DPC was appointed Liquidator of six (6) failed banks which were liquidated namely, Royal, Trust, Genesis, Allied, Interfin and Afrasia.
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