President of the Ghana Association of Bankers, Alhassan Andani has assured that banks in the country will take up the cost of the Deposit Protection Insurance Corporation when it comes into effect next month.
The Deposit Insurance Corporation will protect depositors’ funds in the event of bank failure and revocation of licenses.
In an interview with Citi Business News, Mr. Andani said the insurance will come at no cost to customers.
“It’s a cost of operation; the banks are taking up the cost of the deposit insurance, like any other operational expenditure. We have already notified our various boards and shareholders that you will take a knock on your profit and loss because this cost is coming in which we previously didn’t have”, he stated.
He added: “There’s not that much that we can pass on either. The Ghana Reference Rate is very market-driven, there is a kind of convergence around how much we can charge for fees so we will just get more efficient and take out the cost that has been taking out and ensure that we can absorb the deposit insurance cost like any other cost”.
The Governor of the Bank of Ghana (BoG), Dr. Ernest Addison who stated that the Deposit Insurance Protection Corporation (DIPC) would now be fully operational from October when he met with members of the Ghana Association of Bankers in Accra said this is expected to boost depositors confidence and lock-in the reform process.
“This is one of the key pillars in securing financial sector stability, as amended, in the Ghana Deposit Protection Act 2016 (Act 931),” he said.
The Act was later enacted to protect small savings from losses incurred as a result of the occurrences of an insured event such as the revocation of a deposit-taking institution’s license among others. The Act also supports the development of a safe, sound, stable and efficient market-based financial system.
The governor also mentioned that in the process of operationalizing the DIPC, BoG has already sent letters to banks to begin a process of onboarding after agreeing on an annual premium of 0.3 to 1.5 percent of insurable deposits with participating institutions.
The Bank of Ghana, which is the project implementation authority, will support the DIPC for three years to ensure sustainability.
The agreed payout in the event of bank failure and the revocation of licenses have been pegged at ¢6,250 per customer for banks and ¢1,250 per customer for Specialized Deposit-Taking Institutions.