The recent spate of bank and non-bank financial institution collapse is a sure call for massive changes to the industry. Though there is an act and a corporate body that oversees the activity, the country is yet to see its first Deposit Insurance scheme.
The, Ghana Deposit Protection Act, 2016, (Act 931, as amended) and its required establishment of the Ghana Deposit Protection Corporation (GDPC) form a good foundational framework for the deposit insurance to take off.
The Governor of Bank of Ghana (BOG), Dr. Ernest Addison, speaking at the launch of the corporation jointly organised by the GDPC, and International Association of Deposit Insurers (IADI) sounded the urgent need for a scheme to be set up. In the absence of such a scheme the fiscal space of the country is exposed to the frailties and failures of the banking system. Tax payers monies are used to bail locked deposits.
He further stated that, at the last count, 145 deposit protection schemes existed around the world, with 92 of them being members of the International Association of Deposit Insurers (IADI);
Deposit Protection Insurance is a system established to protect depositors against the loss of their insured deposits in the event that a bank is unable to meet its obligations to the depositors. It provides a financial guarantee which ensures that depositors do not loose all their funds in the event of a bank failure
The maximum compensation payable to a depositor of a bank shall be GHC 6,250.00; and the maximum compensation payable to a depositor of a Specialized Deposit-Taking Institution (SDI), shall be GHC 1,250.00. However, where the compensation paid is less than the deposit standing to the credit of the claimant, the claimant may recover the difference from the liquidator or receiver of the bank or Specialized Deposit-Taking Institution.
It is mandatory for all banks and non-bank financial institutions to join and pay both annual and quarterly premiums to the GDPC