Deposits of 6.9m individuals insured
KATHMANDU, FEB 07 -
Deposits of 6.9 million individual account holders in banks and financial institutions (BFIs) have so far been insured with the Deposit and Credit Guarantee Corporation (DCGC).
“This number represents about 80 percent of the people having access to the formal financial system,” said NRB Spokesperson Bhasker Mani Gnawali, who is also the chairman of DCGC.
“Deposits worth about Rs 194 billion in A, B and C class FIs have so far been insured.”
According to DCGC statistics, the total number of individual account holders whose deposits have been insured includes 5.21 million account holders in commercial banks, 1.01 million in development banks and 0.55 million in finance companies. And, the total insured amount includes Rs 134 billion in 31 commercial banks, Rs 27.97 billion in 85 development banks and Rs 31 billion in 73 finance companies.
“Rastriya Banijya Bank (RBB) tops the chart in terms of the volume of insured deposits as well as the number of depositors whose deposits have been insured,” said Gnawali. “Nepal Investment Bank, Nepal Bank Limited, Agriculture Development Bank Nepal and NABIL Bank make up the top five.”
So far, DCGC has collected deposit insurance premium worth Rs 388 million. The premium rate has been fixed at 20 paisa per Rs 100. As per the Deposit Insurance Bylaw-2010, the premium will not be refunded to member BFIs and those failing to maintain their capital adequacy ratio will have to pay an additional 10 paisa premium on half-yearly basis.
The need for deposit insurance was realised after BFIs started landing in trouble as a result of bad corporate governance and other reasons. The process of putting in place the deposit insurance provision was initiated after Nepal Development Bank went to liquidation, putting public deposits worth millions of rupees at risk.
Gnawali said the mandatory deposit insurance provision imposed by the central bank has helped BFIs in restoring public confidence in banks. “One of the reasons behind the comfortable liquidity situation in the financial system is the mandatory deposit insurance,” he said.
As per the bylaws, depositors will get their deposits worth up to Rs 200,000 refunded within 90 days after the liquidation of a financial institution. Although the government decided to implement the provision on individual deposits worth up to Rs 500,000, the central bank has executed it on deposits worth only up to Rs 200,000. The central bank says it will increase the limit gradually.
Source: Kantipur
