The Sunday News
Dumisani Nsingo, Senior Business Reporter
THE Deposit Protection Corporation (DPC) has increased the deposit protection cover level by 1 000 percent, a move aimed at improving public confidence in the banking sector.
In a statement, DPC said the deposit protection cover level had been increased from $1 000 to $10 000 per depositor with effect from January.
“Pursuant to the provisions of sections 41 (1) of the Deposit Protection Corporation Act (Chapter 24:29), the public is hereby advised that effective 1 January 2020, the deposit protection cover level has been increased from $1 000 to a maximum of $10 000 per depositor, per account type, banking institution and up to a maximum of $500 for deposit taking micro-finance institutions,” read part of the statement.
The applicable cover levels are reviewed from time to time in-line with fund growth and prevailing macro-economic conditions.
“In the event of failure of a contributory institution, every client with a deposit balance equal to or below the specified cover level is guaranteed to receive full compensation of the amount in his or her account at the time of closure of the contributory institution, provided one submits a duly completed claim form. Any outstanding deposit balance above the specified cover is payable through the liquidation process on a pro-rata basis,” read part of the statement.
The new cover level of $10 000 per depositor per banking institution protects 98,9 percent of depositors in full and at a cover level of $500 per depositor per deposit-taking micro-finance institution, 98,5 percent of depositors would be covered in full. The new cover levels fulfil the Corporation’s public-policy objective of ensuring that at least 90 percent of depositors are covered in full.
“For the avoidance of doubt, depositors of all banking institutions closed prior to 1 June 2016 are being compensated using the old cover limit of $500, as new cover level has no retrospective effect. Deposit protection is free for all bank depositors and no application is required as coverage is automatic upon opening a bank account with any deposit-taking institution licensed by the Reserve Bank of Zimbabwe to operate banking or finance business in Zimbabwe,” read part of the statement.
DPC said the increase in the cover levels will go a long way in protecting depositors, enhancing financial stability and public confidence in the country’s financial system.