NRB rejects banks plea to reduce premium
KATHMANDU:
Nepal Rastra Bank (NRB) could not help reduce deposit insurance premium for the commercial banks.
“There will not be any cutbacks in deposit insurance premium being charged by Deposit and Credit Guarantee Corporation (DCGC) for the commercial banks,” said chairman of DCGC Bhaskar Mani Gyanwali.
Both the fiscal and monetary policy for the current fiscal year had directed the commercial banks to get their small deposits up to Rs 200,000 insured by the deposit insurer DCGC by the end of this fiscal year. However, the commercial banks were trying to negotiate lesser deposit premium for their deposits calling the current rate as ‘unnecessarily’ higher.
Deposit and Credit Guarantee Corporation charges Re 0.2 as guarantee fee for every Rs 100 worth of eligible deposits held at the financial institutions annually that is required to pay on half yearly basis.
“It is obvious that every payee wants to pay less for the services rendered,” he said, adding that the bankers were also trying to reduce the insurance amount but that does not mean the central bank has to yield to their demand.
Gyanwali, who is also a spokesperson for the central bank, said that the commercial banks will soon start getting their small deposits insured. Nepal Rastra Bank (NRB) had decreed the class ‘A’ financial institutions also to undergo deposit insurance in its latest circular issued.
There will be additional deposits worth Rs 100 billion of commercial banks excluding Rs 50 billion worth deposits already insured of ‘B’, ‘C’ and ‘D’ class financial institutions, according to DCGC chairman.
The deposit insurance for development banks, finance companies and microfinance banks had started in February 2011. Some 72 development banks, 67 finance companies and one microfinance bank have already insured their deposit up to Rs 200,000 with the corporation.
The corporation regulation that was passed on July 2010 states that in case of bankruptcy of any financial institution, a natural depositor, who has a deposit of up to Rs 200,000, will get the total deposit amount with interest within 90 days from the date the institution goes under liquidation.
The collapse of Nepal Bikas Bank was the alarm bell to all of the concerned bodies involved in regulator of the financial market, making it seriously think about the deposit security in the banking system.
The deposit guarantee is the regulators’ direct attempt at preserving the deposits of the depositors in the wake of mistrust of depositors on financial institutions as some of them started going bad due to poor corporate governance.
Source: THT
Nepal Rastra Bank (NRB) could not help reduce deposit insurance premium for the commercial banks.
“There will not be any cutbacks in deposit insurance premium being charged by Deposit and Credit Guarantee Corporation (DCGC) for the commercial banks,” said chairman of DCGC Bhaskar Mani Gyanwali.
Both the fiscal and monetary policy for the current fiscal year had directed the commercial banks to get their small deposits up to Rs 200,000 insured by the deposit insurer DCGC by the end of this fiscal year. However, the commercial banks were trying to negotiate lesser deposit premium for their deposits calling the current rate as ‘unnecessarily’ higher.
Deposit and Credit Guarantee Corporation charges Re 0.2 as guarantee fee for every Rs 100 worth of eligible deposits held at the financial institutions annually that is required to pay on half yearly basis.
“It is obvious that every payee wants to pay less for the services rendered,” he said, adding that the bankers were also trying to reduce the insurance amount but that does not mean the central bank has to yield to their demand.
Gyanwali, who is also a spokesperson for the central bank, said that the commercial banks will soon start getting their small deposits insured. Nepal Rastra Bank (NRB) had decreed the class ‘A’ financial institutions also to undergo deposit insurance in its latest circular issued.
There will be additional deposits worth Rs 100 billion of commercial banks excluding Rs 50 billion worth deposits already insured of ‘B’, ‘C’ and ‘D’ class financial institutions, according to DCGC chairman.
The deposit insurance for development banks, finance companies and microfinance banks had started in February 2011. Some 72 development banks, 67 finance companies and one microfinance bank have already insured their deposit up to Rs 200,000 with the corporation.
The corporation regulation that was passed on July 2010 states that in case of bankruptcy of any financial institution, a natural depositor, who has a deposit of up to Rs 200,000, will get the total deposit amount with interest within 90 days from the date the institution goes under liquidation.
The collapse of Nepal Bikas Bank was the alarm bell to all of the concerned bodies involved in regulator of the financial market, making it seriously think about the deposit security in the banking system.
The deposit guarantee is the regulators’ direct attempt at preserving the deposits of the depositors in the wake of mistrust of depositors on financial institutions as some of them started going bad due to poor corporate governance.
Source: THT
