GOVERNMENT says it has finalised the draft Deposit Protection Bill.
The draft Bill, which awaits Cabinet approval, will help depositors access funds in the event of a bank or financial institution going into liquidation.
It also aims at establishing a deposit protection fund to be administered by the Bank of Zambia (BoZ) and be used to pay off eligible depositors up to the maximum insured amount of their deposits.
Minister of Finance and National Planning Situmbeko Musokotwane said proposals for legislative changes have been made to the Banking and Financial Services Act and to the Bank of Zambia Act.
“These are being processed for legislation. The Deposit Protection Bill has been finalised and is awaiting Cabinet approval,” he said.
Dr Musokotwane said this in a letter of intent submitted to the International Monetary Fund (IMF).
The letter of intent of the government of Zambia describes the policies that Zambia intends to implement in the context of its request for financial support from the IMF.
Dr Musokotwane says implementation of the Financial Sector Contingency Plan is at an advanced stage with institutional and policy arrangements largely being in place.
He noted that Government is on track with the roll-out of the Treasury Single Account (TSA) by expenditure category with disbursements for wages, grant financed outlays and external debt service being processed through the TSA system.
He said by end June 2011, Government meant to have 60 percent of expenditures being executed through the TSA.
“The remaining 2011 structural reform regarding the Treasury Single Account is broadly on track,” he said.
The depositor fund focuses on protecting small depositors as they are considered less sophisticated when analysing the financial performance and condition of a bank or financial institution.
Last year, BoZ said it was in the process of introducing a Depositor’s Protection Act and Scheme to cushion depositors in case of bank failures.
BoZ said enacting a deposit protection act and creating a deposit scheme will not only create a safety net for depositors but enhance confidence in the banking sector.
According to BoZ data, depositors will be able to get their money within a short period of time from the fund unlike the current situation where the payment of depositors is dependent on the liquidation process ,which takes long and in some cases does not even result in depositors getting their money.
Can you also protect depositors from those Ledger Fees Banks in Zambia (Barclays and Standard Chartered) charge. Barclays Bank, for example deducts K40,000 per month from a depositor’s account as ledger fees, which they do not do in their home country – talk about stealing from the poor. In addition, Barclays also charges you for evey deposit made to the account. Yes, you deposit K1,000,000.00, bank takes K10000, in addition to the K40,000 monthly ledger fees.
Koma iyi ni yamene!!!No more Meridian BIAO!!Well done MMD and Zambia!!
This is what our need!!Not being cheated of ”more money in their pockets” which will never come.
PF you are feeling the heat!!So PF tell us the people of Zambia how you intend to specifically put more money in our pockets with our current budget constraints?!!R.S.V.P.
Can someone please explain exactly how this works to the depositor’s advantage.Then we’ll appreciate the move instead of rumbling….remember not everyone is an economist or understands financial matters.
@3 Zima..Ndola Part one
In a nutshell if a bank goes under like Meridian BIAO as a small depositor your money will not go under with the bank like what happened to a lot of depositors in 1993/1994 when Meridian BIAO went under!!
#4 when Meridian Bank BIAO went under in 1994 i had an account with them and as a depositor then iwas given my money through ZANACO northend branch.So i don’t still understand your explanation..what has changed?
#5 Zima..Ndola Part one
The implementation of this bill will ensure that if you are are depositor after a bank goes under your money will be given to you promptly before even the failed bank is liquidated!We need more of such bills to protect small and medium sized enterprises!!
For now i’ll take yr explanation Thanx !
They should also help reduce ledger fee.example standard chartered bank ledger fee is about 37000 to K40 000 from a poor man’s account.
This move is long over due. many pipo lost huge amounts when Meridian BAO went under. Depositors need protection at all costs. Bwana Musokotwane when are the bank interest rates going to come down. BOZ has been singing now for years and nothing is happening. The other question why has GRZ let mining companies continue banking cash realised from copper sales abroad when we have local and international banks operating in Zambia. Is this system not contributing to a continued weaker Kwacha aganist major currencies. Comments imwe mwasambilila economics and the likes.
They usually do have Zambian accounts, usually with corporate banks like Citibank Zambia. How else would they be able to pay their taxes, wages and other local costs? Its common fact that when the mines pay their taxes the Dollar/Kwacha rate flactuates because they have to convert dollars to Kwacha.
These companies also usually secure loans internationally where the interest rates are much lower, so it financial sense for them to have some accounts abroad where they have their credit lines.
This may be a good move but a lot more still needs to be done to improve banking services in this country.
A large share of any nation’s wealth comes from the ability of its citizens to save and to borrow. Unfortunately, we have a situation in Zambia that is not very conducive to either. Excessive fees (such as the charge levied by Barclays on every deposit!) piss me off too but are only the tip of the problem. More serious is the excessive spread between the rates paid on savings (2% at best?) and rates charged on borrowing (15-17%). This is nothing short of usury and is something govt should look into. With all the fees and large spread on interest why can’t the banks make money or are they generating excessive profits so need better regulation to promote savings and development?
PaFwaka Guys don’t seem to understand this whole thing. Its greek to them and these are the folks who would like to run the government.
Protect us from Barclays Bank please
well done govt and MMD, we need more of such visionary leadership
Its common knowledge internationally that banking in emerging markets is wildly profitable. In a liberal environment though you can’t force them to reduce their fees…unless their is evidence of interest rate manipulation via collusion for example. So the government has to focus on reducing every other variable that causes high interest rates in order to leave the banks with no excuse for their high interest rates on borrowing. So hence the big focus on reducing inflation which is a big component of an interest rate. Inflation in Z is usually around 8-12%, ideally it should be at 3%. But considering it was once at 100%+, 8% isn’t bad. Banks blame the high interest rates on default risk and insurance costs.Â
Too many Zambians don’t pay back their loans because they mismanage their businesses..usually because they don’t implement any real corporate governance. So there is some credibility to what the banks are saying, however the spread between interest rates on savings and interest rates on borrowing is too great…..the banks will take their time to reduce this because it is in their best interest not to.
Here is where parliamentarians should come in…..Parliament should conduct a review of the banking sector’s practices and bring them to task over these issues and exert pressure on the banks. The parliament needs to flex its muscles more often…..
Simply withdraw your money from Barcleys and Stanchart if you’re being raped.We have so many banks in zed today,lets put these blood suckers out of business guys.
” establishing a deposit protection fund to be administered by the Bank of Zambia (BoZ) and be used to pay off eligible depositors up to the maximum insured amount of their deposits. ”
Credit where credit is due, the MMD increasing the security of deposits is a good thing. If they are professional about executing this, I can only give a thumbs up. However, this still has to be tested during the first crisis.
This dirty scum bag works for the banks the banks gives him good dinners and vacations at the expenses poor people who have no one to protect them from these fees and charges to a bank account.Bank are the worst robbers in this country they have been given a license by the Minister of Finance and Parliament to rape and feast on the population in day light