SA Reserve Bank rolls out deposit insurance fund to protect consumer savings
More than 20 years in the making, the Corporation for Deposit Insurance Scheme was launched on Thursday.
Image courtesy of Maitree Rimthong (https://www.pexels.com/@maitree-rimthong-444156)
JOHANNESBURG - The South African Reserve Bank (SARB) has finally rolled out the deposit insurance fund - which is set to protect consumers with savings from any bank failure.
More than 20 years in the making, the Corporation for Deposit Insurance Scheme was launched on Thursday.
It’s expected to act as a financial safety net and protect depositors with savings at the country’s local banks.
In the rare event that a bank fails, is liquidated and placed into resolution the deposit insurance will kick in.
This applies to commercial and mutual banks as well.
The fund will protect individual customer cash deposits but only up to R100,000.
This means if you’re a depositor with R150,000 at a certain bank that goes under R100,000 of the savings will be rescued though you lose the remaining funds.
SARB governor Lesetja Kganyago says this is a game changer for the financial sector.
“The [South African] Reserve Bank has a mandate for financial stability, and with the introduction of deposit insurance today we take a step forward to make the financial system even safer.”
Only a dozen banks have failed since 1994, including the catastrophic collapse of VBS Mutual Bank.
SA citizens and taxpayers were defrauded out of roughly R2 billion in what's now dubbed the great bank heist.