BoG to establish Deposit Protection Corporation

IssahakuA Deposit Insurance Corporation is to be established by the Bank of Ghana (BoG) to protect small savers.

The Governor of the BoG, Dr Abdul Nashiru Issahaku who disclosed this at the 16th working luncheon and 33rd Annual General Meeting of the Ghana Association of Bankers (GAB) in Accra said the establishment of the Deposit Insurance Corporation had become necessary to protect small savers from loss incurred as a result of the occurrence of an insured event, which is the revocation of the license of a deposit-taking institution.

He said initial capital and logistics for the Corporation would be provided by the BoG.

The Governor said Ghana Deposit Insurance Corporation would have a Governing Board consisting of the following:  The Governor of the BoG or his representative not below the rank of Deputy Governor as Chairman, one representative from the Ministry of Finance not below the rank of Director, The Chief Executive Officer of the Deposit Insurance Corporation and one representative from the banks.

Dr Issahaku also said the Governing Board would have one representative from the Specialised Deposit-Taking Institutions, a Legal Practitioner of not less than ten years standing at the Bar nominated by the Ghana Legal Council  and one certified practicing accountant nominated by the Institute of Chartered Accountants Ghana.

Dr Issahaku said the Deposit Insurance Corporation was a creation of the Deposit Protection Act which was passed in July by Parliament and was awaiting presidential assent.

The Governor explained that the Ghana deposit protection scheme would be developed after the establishment of the corporation and would initially function as a pay box with the amount of compensation to be paid to bank customers in the event of bank failure.

“However as provided by the Deposit Protection Bill, the scheme would eventually be transformed into a fully-fledged deposit insurance scheme with a broader mandate to engage in risk-minimisation and other roles,” Dr Issahaku said.

He said when the scheme was fully created a customer in the event of bank failure would be paid GHS 6,250, while customers of Specialised Deposit Taking Institutions would take GHS1, 250.

Dr Issahaku disclosed that an initial capital of 26 million was to be provided for the operations of the Deposit Insurance Scheme.

“KfW will provide 13 million through a loan arrangement and the remaining 13 million Euros would be provided by the Government of Ghana and the BoG,” he said adding that the initial staff for the scheme would be seconded from the BoG.

The Governor disclosed that KfW would provide about 1 million Euros in the form of grants to facilitate the establishment of the scheme.


By Kingsley Asare

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