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Deposit Insurance Scheme Gov't, BOG to contribute 10mil Euros towards Deposit Insurance

The decision on the need for a Deposit Insurance Scheme was made after DKM Microfinance and other finance companies squandered the monies of their depositors to the  tune of over GHC100 million.

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Bank of Ghana play

Bank of Ghana

The Government of Ghana and the Bank of Ghana are required to contribute 10 million Euros each  to form seed capital for the proposed Ghana Deposit Protection Cooperation.

The cooperation will be in charge of running the Deposit Insurance Scheme proposed by the Bank of Ghana to forestall further losses of investments of depositors.

The decision on the need for a Deposit Insurance Scheme was made after DKM Microfinance and other finance companies squandered the monies of their depositors to the  tune of over GHC100 million.

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The Bill currently before Parliament is likely to be passed into law within the next couple of months to pave the way for retail deposits to begin.

 The other source of seed capital will be a one off insurance premium to be paid by each participating financial institution equivalent to 0.1% of their minimum capital.

Subsequently the scheme will be financed from regular premiums assessed and paid annually by deposit taking financial institutions to the GDPC.

The Bill, which was initially introduced onto the floor of Parliament by Deputy Finance Minister Cassiel Ato Forson on behalf of Finance Minister Seth Terkper in May 2015, has undergone its second reading and the legislative house will now be expected to fast track its passage into law, guided by the report of the Parliamentary Finance Committee.

Deposit insurance will cover all deposit taking institutions licensed by the BoG: universal banks, savings and loans companies, deposit taking non bank finance houses, rural banks and microfinance institutions inclusive.

However only relatively small deposits will enjoy insurance cover with insured deposits placed with banks subject to a maximum cover of GHc5,000 and those with other deposit taking institutions subject to a cap of GHc1,000.

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