Total 66 development banks and 67 financial institutions -- class B and Class C citatory BFIs respectively -- have signed the pact in line with the Credit and Deposit Guarantee by-laws that requires all banks and financial intuitions of class B, C, and D (micro-finance) to secure the deposit up to Rs 200,000 from individual depositors.[break]
Total 83 development banks, 79 financial institutions and 19 micro-finance companies are in operation across the country. The government is formulating DCGC Act to ensure security guarantee of small deposits in all BFIs.
The Nepal Rastra Bank had already asked the B, C, D category BFIs some six months back to sign the agreement for the security of deposits of small depositors. However, 48 BFIs have still to sign the pact with DCGC.
“Total 48 banks and financial institutions -- 17 development banks, 12 financial institutions and all 19 micro-finances -- are still to ink the deal with the DCGC. Though we have not set any deadline, we are hopeful that they would enter the agreement by the end of this fiscal year,” said Bhaskar Mani Gyawali, NRB spokesperson.
Gyawali said preparation was going on to make it mandatory for class A BFIs (commercial banks) as well to guarantee the small deposits each worth Rs 200,000, from coming fiscal year.
Amid growing feeling of insecurity about deposits in banks and financial institutions, the government has already announced the Small Deposit Guarantee Program covering the deposit up to Rs 200,000 at development banks and financial institutions in the budget of the current fiscal year.
The policy was introduced since last year beginning with class D (micro-finances) financial institutions. However, no micro-finance has signed the agreement in this regard with DCGC.
The government has allocated a budget of Rs 250 million for the Deposit and Credit Guarantee Corporation, an agency that implements the program, whose capital will be gradually increased to Rs 2 billion.
The by-laws have made it mandatory to sign the agreement with DCGC to contribute 20 paisa per Rs 100 of deposit per year, for the security of deposit worth Rs 200,000 in Deposit Guarantee Fund under the DCGC.
Keeping in view the risks faced by small depositors, the proposed act has incorporated all classes of BFIs under the deposit guarantee scheme.
As per the by-laws, those who would lose their deposits after the bankruptcy of the deposit recipient BFIs, would get compensation within seven days after the liquidator submits the report to the fund.
Before refunding the lost amount to the depositors, the fund would issue 15 day notice calling them to claim their lost deposits.
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