header
                        banner

5 FIs insure saving of small depositors

By
KATHMANDU, March 2: Small depositors of five financial institutions (FIs) now need not worry about losing their savings up to Rs 200,000, for these institutions have bought deposit insurance package, going by which they will surely get their savings back even if those financial institutions (FIs) went bust.



The FIs that secured their depositors include Capital Merchant Banking and Finance (CMBF), Kuber Merchant Banking and Finance (KMBF), Birgunj Finance (BF) and Lord Buddha Finance. “Sindhu Development Bank too entered into an agreement with us for the insurance coverage on Tuesday,” said Jagadish Chalise, deputy general manager of the Deposit and Credit Guarantee Corporation (DCGA), the state-promoted agency entrusted to provide the critical service.[break]



Although the corporation is yet to consolidate records, officials said they have already safeguarded thousands of depositors of these five financial institutions from the risk of losing their savings.



Chalise further informed that more than two dozen development banks and finance companies have already approached the corporation to secure saving of their small depositors. “We expect more than five dozen financial institutions to buy the insurance cover by the end of next week,” he told Republica.



For the service, the financial institutions will need to pay 20 paisa per Rs 100 worth of insured deposits. If the financial institutions went bankrupt, the corporation has promised to repay insured deposits to each depositor within 45 days of the liquidation of the ill-fated institution.



The scheme materialized after the government pushed for deposit insurance program in the wake of the collapse of Nepal Development Bank (NDB), when small depositors almost lost their hard-earned money. Though the program had featured in the budget for 2009/10, its implementation was delayed due to poor financial health of DCGC and the lack of clear operational strategy.



But the corporation recently adopted the new Deposit Insurance Regulations, clearing existing hurdles. This paved way for the implementation of the program, following which Nepal Rastra Bank (NRB) on Feb 15 instructed all development banks and finance companies to buy the scheme to safeguard the savings of small depositors.



There are more than 165 development banks and financial institutions in the country and they have mobilized deposits of more than Rs 150 billion.



“We estimate that Rs 30 billion of the amount belong to the small depositors,” said NRB Spokesperson Bhaskar Mani Gyawali. Talking to Republica, he even urged all financial institutions to get their deposits insured as per the central bank´s directive. “If they did not comply, we could prevent them enjoying facilities pledged by the central bank,” he stated.



He added that the central bank will expand the scheme to commercial banks as well soon.


Related story

Insurance companies are cheating the people, and destroying the...

Related Stories
ECONOMY

Shangri-la brings two new saving products

1 min read
ECONOMY

Sunrise Bank insures depositors

1 min read
POLITICS

Parliamentary probe committee says 40 cooperatives...

1 min read
ECONOMY

Banks see deposits move from saving to FD accounts

1 min read
ECONOMY

Energy-saving starts at home: Nirvana Chaudhary

1 min read