THE Deposit Protection Corporation (DPC) says it is able to refund depositors of liquidated banks, allaying fears that the Deposit Protection Fund (DPF) is bankrupt.
With the latest crisis in the banking sector, there are fears the fund’s coffers are empty and the institution does not have the financial wherewithal to protect the public in the case of bank closures.
Several banks have been listed in critical condition in the past two months, culminating with the closure last month of Allied Bank.
Tetrad Bank has also been placed under liquidation as the crisis continues in the country’s financial sector.
DPF’s primary function is to compensate depositors in full or in part for losses incurred in the event of insolvency of a contributory institution.
In a volatile banking environment which has seen many financial institutions facing liquidation, there were rising fears that the DPC could fail to deliver its mandate.
The list of banks in distress continues to balloon as in 2015 alone, Allied Bank has joined the liquidation statistic while Tetrad Bank has been placed under judicial management.
However, in a response to Southern Eye Business this week, DPC chief executive officer John Chikura assured the public that the DPC has capacity to pay off all depositors of banks which have been closed to date up to the maximum insured limit of $500 per depositor per account.
“As per our mandate, we are always prepared and ready to fulfil our statutory mandate as we have robust systems in place that are backed by years of experience,” he added.
Concerns have, however, been raised on the suitability of the fund to bulk depositors like companies and schools which have not been considered individually and would still hold hefty balances after a $500 reimbursement.
Chikura said any balance above the insurable amount would be paid through the liquidation process upon the realisation of assets.
“The disposal of the bank’s assets will only take place after the granting of a final liquidation order by the High Court,” he said.
Recently, the DPC held meetings of creditors and members at the Master of High Court to get proof of claims ahead of the auctioning of Royal Bank’s assets after it surrendered its operating licence in July 2012.