Cabinet approves amendments to Deposit Protection Corporation Act
Staff Reporter
ZIMBABWE’s Cabinet yesterday considered and approved the Principles to amend the Deposit Protection Corporation Act [Chapter 24:29] as presented by the Minister of Finance and Economic Development.
According to the cabinet minutes, the amendments to the Act will provide a governing legal framework for banking institutions in the event of their closure while it will also be amended to establish a separate insolvency regime for banking institutions.
Yesterday’s twenty sixth post-cabinet press briefing showed that the act will also be aligned to other local laws as well as comply with International Association of Deposit Insurers (IADI) Core Principles for Effective Deposit Insurance Systems.
“The Deposit Protection Corporation Act will be amended to establish a separate insolvency regime for banking institutions, align the Act to other local laws as well as comply with International Association of Deposit Insurers (IADI) Core Principles for Effective Deposit Insurance Systems.
The Deposit Protection Corporation will be the sole deposit insurer and liquidator of banking institutions in Zimbabwe,’ read the brief.
According to the core Principles and preconditions of the IADI, policymakers have choices regarding how they can protect depositors and contribute to financial system stability while explicit deposit insurance has become the preferred choice compared to other alternatives such as reliance on implicit protection.
A deposit insurance system clarifies the authority’s obligations to depositors limits the scope for discretionary decisions, can promote public confidence, helps to contain the costs of resolving failed banks and can provide countries with an orderly process for dealing with bank failures and a mechanism for banks to fund the cost of failures.
The Core Principles are reflective of, and designed to be adaptable to, a broad range of country circumstances, settings and structures.
