MAIN FEATURES OF THE SCHEME

THE key features of the proposed deposit insurance scheme are:

• The scheme will be a separate legal entity with its own legislative framework and governance requirements, but it will be physically located in the Sarb.

• The scheme will cover bank deposits up to R100 000 per depositor per bank.

• If the scheme does not have sufficient funds to cover deposits, the Sarb will provide a funding line to the scheme for emergency funding purposes. This emergency funding will be recovered from liquidation proceeds and contributions by the remaining banks.

• Where the owner of an account can be identified easily (for example, single accounts and joint accounts), the scheme will pay out depositors within 20 working days after a bank’s deposit accounts have been closed. It may take longer for the scheme to pay out the holders of accounts who cannot be identified easily (for example, pooled accounts). Over time, the scheme should reduce the time it takes to pay out all account-holders, and aim to pay out all covered deposits within seven working days after a bank’s accounts have been closed.

• It will be compulsory for all registered banks to belong to the scheme.

• The scheme will be consulted whenever the Sarb receives an application for a new banking licence.

• The following rules are proposed with respect to deposit coverage:

– Foreign nationals’ deposits and foreign-currency deposits held at domestic branches of South African banks will be covered.

– Deposits will be covered on a gross basis. In other words, when calculating the amount to be paid to a depositor, interest earned will be added, but bank charges will not be deducted.

– Deposits at foreign branches and subsidiaries of South African banks abroad will not be covered.

– Pooled accounts will be treated as a single account, except in the case of pooled accounts where professional practitioners hold deposits on behalf of clients.

– In the case of a joint account, each account holder will be covered separately, up to the cover limit. The deposit balance will be split equally between the account holders, unless the underlying documentation specifies a different arrangement.