Bankers laud new depositors’ law

The President of the Chartered Institute of Bankers, Clifford Mettle, has praised the Bank of Ghana for the recently passed Deposit Protection Law, saying it will strengthen confidence in the banking sector.

Parliament on Tuesday passed the Ghana Deposit Protection Bill which requires that a scheme be set up “to protect small depositors from loss incurred 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.”

What this essentially means is that, depositors of a bank or a financial institution do not stand to lose all their money in case of any eventuality that will result in the loss of depositors funds.

This, Mr. Mettle said, is a good initiative which will restore lost confidence in the banking and financial services sector following the recent scandal where a lot of depositors lost their livelihoods to Ponzi schemes.

“I think it is long overdue because this bill should have been in place a couple of years back. If you look at the composition of the depositors, they are largely SMEs and looking at how vulnerable they are, this should have been done long ago to protect them,” Mr. Mettle said in an interview with the B&FT.

He added: “It will restore confidence and shoot up the level of credibility in the banking sector because the recent scandal that happened in the financial sector dealt a very big blow to the confidence of depositors. So this new law will restore such confidence and erase any fears which come with depositing your money with any financial institution.”

He further stated that the new law will promote financial inclusion that banks have long been struggling to achieve due to distrust and credibility issues raised by majority of the unbanked population, which is believed to make up 70 percent of the country’s population.

While some have said it is not enough for the law to guarantee depositors a part and not the whole of their deposits when the unexpected happens, Mr. Mettle believes it is a step in the right direction considering it is a new system that is yet to be tried in the country.

“If I put myself in the shoes of a depositor, I would be very happy and confident in the system if the coverage was 100 percent. But because it is a new thing which is now about to be tried, I think we should start from somewhere and if the structures are well in place and people develop confidence in it, then there will be room for the percentage to be scaled up,” he stated.

Per the new law, “the Corporation shall not pay to an insured depositor, an amount that is more than the maximum insured amount of GH?5,000, in case of a depositor of a bank; and GH?1,000 in case of a depositor of a specialized deposit-taking institution.”