Deposit Insurance Corporation (DIC), which is set for official launch next week would offer safety nets for depositors in case of a bank failure, its director general Chitani Chigumula has said.
The corporation is a joint venture between the Reserve Bank of Malawi (RBM), which holds a 60 percent stake and the Malawi Government, with a 40 percent shareholding.
It was established through the Deposit Insurance Corporation Act of 2022 and it provides protection to depositors against risk of losing their eligible deposits arising from a failure or closure of a bank.
Addressing journalists in Blantyre yesterday, Chigumula said installation of the DIC board last year marked the beginning of premium payments by commercial banks.
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“Currently, the DIC covers only bank deposits, with a prescribed limit of K1 million per depositor in case of a bank failure. However, the DIC board has the authority to extend coverage to other financial sectors in the future,” he said.
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The establishment of the DIC is expected to boost confidence in Malawi’s banking sector and provide a safety net for depositors.
According to Chigumula, the establishment of the corporation will strengthen customers’ trust in the banking community.
He said with the assurance that their deposits are protected; customers will feel more confident about keeping their money in the bank.
“This enhanced confidence can lead to increased deposit levels, which benefits banks by providing them with more stable funding sources.
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“The DIC will complement regulatory and supervisory measures by adding a layer of security for depositors,” he said.
He said in the event of a bank failure, the corporation would step in to ensure that insured deposits are promptly reimbursed up to the coverage limit.
