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Dr Ernest Addison
Dr Ernest Addison

BoG to implement Deposit Insurance Scheme soon

The Bank of Ghana (BoG) will commence the implementation of the Deposit Insurance scheme in the second quarter of 2018.

Deposit insurance is a protection provided by the state against risk of loss of deposits in a deposit taking institution.

The scheme, among other things, seeks to safeguard the savings of individual depositors in the country in order to build trust in the formal banking system and to contribute to the stabilization and development of the financial system in Ghana.

Dr Ernest Addison, the Governor of the Bank of Ghana, speaking at this year’s Graphic Business/ Stanbic Bank breakfast meeting, said the deposit insurance was an additional safety net for depositors.

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The event on the theme: “Deposit insurance: A catalyst for a stronger banking industry,” provided  players in the banking sector the opportunity to deliberate on the advantages and disadvantages of deposit insurance  which is now mandatory following the passage of the Ghana Deposit Protection Act, 2016, Act 931 two years ago.

Dr Addison, described deposit insurance as “an additional safety net for small depositors,” explained that, its introduction was to complement ongoing efforts by the central bank aimed at creating a stable financial sector.

Under the deposit insurance scheme, the government and the Bank of Ghana (BoG) are expected to contribute €10 million each as seed capital towards its establishment.

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He said, currently there were some amendments which needed to be done, so the scheme would be sent to parliament to ratify those changes for implementation.

Mr Franklin Belnye, Project Coordinator, Ghana Deposit Protection Cooperation, Bank of Ghana said , Ghana still have large number of small unsophisticated depositors who need protection . So there is the need to collate to improve financial inclusion and increase deposit mobilization and also there is the need to collate to boost confidence in our financial system.

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He said government was yet to sign an agreement with the German government, where an amount of 13 million euros would be made available for the scheme.

Nana Otuo Acheampong said, “Their prudential supervision is still there. The passing of the act is to ensure that depositors are protected if something goes wrong.”

“But that shouldn’t take away the fact that the central bank’s supervision should be intensified. Lately, what we are hearing in the news is not good at all. The number of institutions that are going down outside the banking sector is becoming one too many.

 

By: Latifa Carlos

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