The government is yet to amend the Bank Deposit Insurance Act 2000 to bring non-bank financial institutions under the deposit insurance scheme although Bangladesh Bank took the initiative three years ago, said officials of the central bank.
The BB took the initiative to amend the act in 2011 to give more protection to the depositors against any kind of vulnerabilities in the financial institutions, a BB official told New Age on Sunday.
‘The central bank earlier prepared a draft bill on the act and sent it to the ministry of finance. But the ministry asked the central bank to modify the draft’, he said.
The central bank sent the modified draft to the ministry of finance in May 2013, after which the ministry again asked for further modification of the draft, he said.
The central bank finally sent the modified bill to the ministry in October 2013, but it (ministry) is yet to take any effective measure to place the draft in the parliament, he said.
The central bank earlier requested the finance ministry a number of times to take initiative to amend the act, but the ministry is yet to take any effective measure in this regard, the BB official said.
As per the existing act, the depositors of the scheduled banks now are facilitated by the deposit insurance scheme, but the depositors of NBFIs do not get any facility of the scheme, he said.
A depositor of a bank in favour of his/her current or fixed or saving deposit would get maximum Tk 1 lakh from the deposit insurance trust fund if his or her bank collapses for any reason, according to the existing act.
The amount of deposit insurance coverage will increase to Tk 2 lakh from the existing Tk 1 lakh against each depositor when the act would be amended, they said.
The Deposit Insurance Act 2000 says in case of an insured bank’s collapse or bankruptcy, BB shall pay an amount equal to the money of each depositor of that bank.
The deposit insurance was a system established by the government to protect depositors against the loss of their deposits in the event a scheduled bank is unable to meet its obligations to depositors.
Deposit insurance was first introduced in August 1984 as a scheme through ‘The Bank Deposit Insurance Ordinance 1984’. In July 2000, the ordinance was repealed by an act called ‘The Bank Deposit Insurance Act 2000’.
The percentage of deposits fully insured is now 84 per cent and the figure will increase significantly when the amount of deposit insurance coverage will be raised to Tk 2 lakh, he said.
Under the existing rules, the state-owned, the specialised, the foreign and the private commercial banks have to pay 0.08 per cent as risk-based premium to the central bank’s deposit insurance trust fund.
The problem banks as per BB CAMELS rating have to pay 0.10 per cent and early warning banks have to pay 0.09 per cent as risk-based premium.
The risk-based premium rate of the banks may also be fixed for the NBFIs, the official said.
The BB’s cumulative deposit insurance revenues stood at around Tk 3,322 crore as of July 21, 2014. Most of the fund is invested in the government securities.
The banks have to pay the premium against their total saving, current and fixed deposits of the clients.
-With New Age input
