The Deposit Insurance Protection Corporation (DIPC) will become fully operational on October 1, 2019, as part of moves to further boost depositors’ confidence and seal the reform process in the banking sector.
The deposit insurance is one of the key pillars in securing financial sector stability, as amended in the Ghana Deposit Protection Act 2016 (Act 931), which was enacted to protect small savings from losses incurred as a result of the occurrence of uninsured events, such as the revocation of a deposit-taking institution’s licence.
The Governor of the Bank of Ghana (BoG), Dr Ernest Addison, who disclosed this at the 17th Annual Working Luncheon organised by the Ghana Association of Bankers (GAB) in Accra last Friday, explained that the act also supported the development of a safe, sound, stable and efficient market-based financial system.
BoG on DIPC
“In the process of operationalising the DIPC, the bank has already sent letters to banks to begin the process of on-boarding, after agreeing on an annual premium of 0.3 to 1.5 per cent of insurable deposits with participating institutions,” Dr Addison explained.
“The BoG, which is the project implementation authority, will support the DIPC for three years to ensure sustainability,” he said, adding that “the agreed payout, in the event of bank failure and the revocation of licences, has been pegged at GH¢6,250 per customer for banks and GH¢1,250 per customer for specialised deposit-taking institutions”.
Dr Addison said the financial sector was currently healthier and better able to withstand external shocks, compared to the sector as it was at the beginning of 2017.
“It is better capitalised, liquid, profitable and more efficient and has adequate capital buffers to enable it to manage any adverse external developments,” he said of the new banking sector, stressing that such an optimistic outlook seemed nearly impossible in 2017 when the reforms began.
“A dynamic, growth-oriented financial system must be strong, well capitalised and effectively supervised within a fair regulatory environment, in accordance with international best practices and standards,” he said.
He conceded that there was a huge regulatory burden on the BoG to remain vigilant towards all forms of risks in the banking sector and tighten its regulatory and supervisory responsibilities to continue with efforts at strengthening and stabilising the banking industry.
He stressed that “these reforms will ensure the safety and soundness of banks, aligning macro and micro-prudential risks to bank capital and addressing cross- sectoral and cross-border risks.
Source: Graphic Online