Finance Minister, Seth Terkper, has hailed passage of the Ghana Deposit Protection law, 2015, saying it will bring confidence into the banking and financial services sector.

Parliament passed the bill yesterday, and according to the finance minister, it is an insurance scheme that will make for a safer banking system by protecting especially small depositors.

Seth Terpker, who was in parliament when the bill was passed, told the B&FT that: “the Scheme works like this- the banks and the depositors pay a little amount when they deposit their money and the Corporation which is established by this law will take those funds and buy an insurance from an insurance company- and so when events happen like the DKM and others, then you are assured that you will be reimbursed-not necessarily the full amount, but at least you will recover a certain amount-so if the insurance is up to say GH?100,000 it means that anybody whose deposit is below GH?100,000 will be fully reimbursed if he qualifies. Those whose deposits are above 100,000 will be reimburse up to GH?100,000”.

He added that: “This is a protection the Central bank puts in place. The reason it is referred to as small depositors’ insurance is that it envisages that the limit will cater for the majority of small depositors-employees, even SMEs who are doing small family businesses and for big businesses as well; many of the big businesses are capable of taking insurance on their own, but so long as it is a compulsory scheme they are insured up to a certain limit.”

The Ghana Deposit Protection Bill, 2015 which is to establish a Deposit Protection Scheme to protect a small depositor from loss incurred by the depositor as a result of the occurrence of an insured event and to support the development of a safe, sound, efficient and stable market-based financial system in Ghana.

Inherent in the Scheme is also the establishment of the Deposit Protection Fund which constitutes the assets of the Scheme and the Deposit Protection Corporation to manage the Scheme efficiently and effectively towards the attainment of the objects of the Scheme.

Chairman of the Finance Committee of Parliament, James Avedzie also believes the proper implementation of the scheme will protect depositors and save them from total loss when the unforeseen happens.

“If it is a bank, you can be protected to the tune of GH?6,250 for now which means that if I have GH?10,000 in a bank and that bank collapses I can be assured that I can be reimbursed to the tune of GH?6,250”.

Although some of the MPs felt the amount to be reimbursed is not enough, Mr Avedzie explains that the banks will be asked to pay more insurance premium.

“The small ones in other specialized institutions are protected to the tune of GH?1,250. That is all the bill is talking about. If the bill had been in place before the famous DKM issue happened, the depositors would have been protected to this level- at least to cushion them before we look at how the rest will be handled.”

Commending the initiative, a member of the Finance committee, Dr Mark Osei Assibey indicated said: “For a microfinance, I think a 1,250 is quite fair. It gives us a cushion. We have never had this as a country. It gives insurance to small depositors.”

He urged the Bank of Ghana to go out there and educate the public after the bill has been assented to by the President to become law.

“They will have to first establish a Corporation, then the Corporation will then go out to educate the public about this new development so that the depositors will have confidence that I am protected to this level, in the case of any event happening which is an insurable event,” he added.