By Kingsley Jassi:
The newly launched Deposits Insurance Company (DIC) will have 93 percent of depositors in the country covered in the event of bank failure, the company has said.
DIC will provide a safety net that will ensure up to K1 million is refunded to a depositor immediately a bank is declared bankrupt and the excess deposits would be refunded following a liquidity process the DIC will be tasked to handle.
According to DIC Board Chairperson Gabriella Chiutsi, a research was conducted and found that of all the depositors in the country’s banking sector, 94 have bank accounts with less than K1 million balances at any given time.
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Chiutsi was speaking after the official launch of the company in Lilongwe on Thursday night.
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“Most people who are vulnerable to bank failure are within the 93 percent as such the K1 million is covering the majority and those with more deposits will get the rest of their money through the liquidation process,” Chiutsi said.
DIC is a partnership of Reserve Bank of Malawi, with 51 percent and Ministry of Finance with 49 percent and was established through an Act of Parliament which was passed in 2022 to introduce the explicit deposit security policy, making the country become the 98th with such a system in the world.
Bankers Association of Malawi Chief Executive Officer Lyness Nkungula said DIC has strengthened the market confidence in the country’s banking sector as depositors will know for sure that there is no chance to lose their money once a bank is closed.
“It was safer before but the coming in of DIC has confirmed that safety and will help to build confidence in the local banks by the depositors,” Nkungula said.
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The establishment of DIC was supported by the World Bank through the Financial Inclusion and Entrepreneurship Scaling.
