DPC to compensate depositors of six closed banks

A total US$3,2 million, representing 50% of the amounts owed to depositors of six now-defunct banks, that crumbled in that last few years are yet to be paid out by the Deposit Protection Corporation (DPC).

DPC has been making payments to depositors of six closed banking institutions namely AfrAsia Bank, Allied Bank, Interfin Bank Limited (IBL), Trust Bank, Royal Bank and Genesis Investment Bank (Genesis).

“As at 22 November 2016, about US$3,16 million, being 49,2% of the total insured deposits in the aforementioned failed contributory institutions had been paid to 11,447 depositors out of the Deposit Protection Fund (DPF),” said the DPC in emailed responses to businessdigest.

“Compensation of deposits via the DPF is still ongoing and requires depositors who have not already done so to submit duly completed claim forms as funds are readily available,” added the DPC.

This comes after the DPC noted, in its 2015 annual report for the period to December 31, a poor response rate of about 25% among depositors whose funds are trapped in failed banks.

The DPC said since its inception in 2003, a total of 14 637 out of 59 524 depositors of closed banking institutions have benefitted from the deposit protection scheme, translating to 25% of the eligible depositors who have lodged their claims with DPC.

“One of the major hindrances in contacting depositors has been the poor quality of depositor records at banks such that the contact details like addresses, phone numbers and e-mails are not up to date. This is a major challenge which negatively affects the response rate,” said DPC in its 2015 annual report.

“Furthermore, most depositors with small balances are reluctant to submit their claims whilst some corporates with balances above the insurable amount would rather wait for the liquidation process than submit claims for the-maximum insurable amount of US$500,” added the DPC. The deposit cover was recently increased to US$1 000.

As at December 2015, the DPC reimbursed a total of 11 155 depositors of Genesis Bank, Royal Bank, Trust Bank, Allied Bank, Interfin Bank and AfrAsia Bank a total of US$3,4 million.

The DPC said a total amount of US$6,418,930 was payable as of December 2015 if all depositors of the failed contributory institutions duly file their claims.

“Compensation to depositors of these six banks is still in progress. Depositors have been paid using bank transfer, cash or through mobile platforms like EcoCash and Telecash. The mobile platforms have been very popular with most of our depositors who reside in remote areas,” added the DPC in the annual report.

The DPC’s 2015 annual report also shows about 40% of the corporation’s revenues are gobbled up by operating expenses, mostly staff costs, crippling the institution’s ability to effectively fulfil its mandate.

Operating expenses totalled US$2,9 million with staff costs amounting to US$2 012 844.