Siphakeme .Mnindwa
Patrick Chitumba, Midlands Bureau
THE Deposit Protection Corporation (DPC) has urged the public to safeguard savings by utilising registered financial institutions.
Speaking at a recent DPC Midlands awareness workshop in Gweru, chief executive officer, Mr Hopewell Zinyau, said the organisation’s “paybox plus” mandate ensures depositors are compensated up to a certain limit in the event of a registered financial institution’s failure.
“We are mandated by the DPC Act to pay compensation to depositors in the event of insolvency of a contributing institution,” he said.
Mr Zinyau noted that the DPC has compensated losses suffered in 26 financial institutions, including 13 commercial banks, one savings bank, four building societies, one infrastructure and development bank, and seven deposit-taking micro-finance institutions. He explained that deposit protection is provided automatically upon opening an account with a member institution.
“Cover levels are up to US$1 000 per account for banks and US$500 for deposit-taking micro-finance institutions or the ZWG equivalent. Cover limits will be reviewed in the first quarter of the year. About six percent of all valid existing bank accounts in Zimbabwe are covered, meaning that if any of these banks fail today, we are able to compensate up to this level,” he said.
Mr Zinyau warned that members of the public dealing with unregistered micro-finance institutions are not beneficiaries of the scheme.
“It is very important to promote formal banking channels so that people are covered in the unfortunate event of a bank failing; their deposits will be insured and safe,” he said.
He said that the DPC is actively promoting financial literacy and inclusion, even in the remotest areas. He cautioned the public about the risks of financial pyramids.
“We do not encourage these financial pyramids because if someone disappears with your money, you will be prejudiced as they do not have operating licences. When they come to us, we tell them that it is unfortunate this is not a registered financial institution,” he said.
Mr Zinyau also said the DPC conducts off-site supervision to ascertain the viability of member banks. Addressing the same meeting, DPC public relations manager, Mr Allen Musadziruma, assured depositors that their deposits are safe with member banks, which are registered financial institutions.
“We know that some people keep money under pillows, while others move around with it, risking robberies. Money should be kept in the bank.
“Service fees are not that high because the risks that the banks are taking as custodians of those funds are very high. We are promoting financial inclusion, and everyone should utilise the formal banking channel,” he said.
Mr Musadziruma also stated that the DPC is compensating depositors who lost savings during the migration from United States dollars to local currency a few years back.
“Ideally, all people with bank accounts in the banking sector are supposed to be compensated for loss of funds. It’s a gradual process and now at POSB and will move to other banks once funds become available,” he said.
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