Finance Minister Seth Terkper has expressed optimism in the sustainability of the Deposit Protection Bill to repay depositors in times of emergencies.
The bill which was passed by parliament recently to protect depositors from unforeseen circumstances during crisis of financial institutions is currently awaiting presidential assent.
Speaking to Citi Business News, Mr Terkper explained that the passage of the bill will help address issues of customers losing their funds.
“This is the beginning and it is a corporation. As the fund grows and in line with inflation, it is possible that this will go up incrementally so I think the important thing is that we are starting this very important step,” he said adding that “but I think that with time we will see development set in.”
Per the law, customers of banks are entitled to GHS 6,250 in compensation in crisis, while customers of other financial institutions such as the microfinance institutions may receive up to GH1, 250 in compensation.
Meanwhile, some have described the amounts as too little for a reimbursement.
Mr Terkper however of the view that “It makes for a safer banking system.
According to him, “banking is based on lending a certain amount higher than a deposit so if everybody rushes and goes in for their deposits which have gone into loans and others, the situation will result in a panic withdrawal, leading to problems for the banking system.”
Parliament passes Deposit Protection Bill
The Deposit Protection Bill was passed by parliament on Monday to protect depositors from unforeseen circumstances that may result in loss of funds.
The bill follows recent debacle that hit the microfinance sector resulting in customers of DKM Microfinance and God is Love Fun, among others losing millions of Ghana cedis.
The bill is expected to receive presidential assent for it to become law after which the Bank of Ghana (BoG) will operationalize it.
Monies per the bill will be paid by the Deposit Protection Fund Corporation.
By: Jessica Ayorkor Aryee/citibusinessnews.com/Ghana