A new parastatal, the Depositors Protection Corporation (DPC), is on the cards following the introduction of a law to protect depositorsâ€™ interests.
The Depositors Protection Corporation Act which was passed last year came into effect on the 16th of March 2012 after being gazetted, paving way for the creation of a body that will further depositors interests.
The DPC will have the core mandate of overseeing the Depositors Protection Fund that provides for compensation of depositors in failed financial institutions.
This function was previously performed by the Depositors Protection Board.
The parastatalâ€™s board of directors will be appointed by the Finance Minister, while the majority of the members will be representatives of financial institutions.Â
A former banker, Mr Godfrey Dupwa said the approval of the Act and the formation of the DPC is a positive development which is in line with international best practices.
â€œThis is a welcome development which is going to excite depositors and add confidence in the banking sector. The Act will ensure that when banks fail, depositors are able to get their money,â€ he said.
The DPC will also play an advisory role to the RBZ and Registrar of Banks in supervising and ensuring discipline in financial institutions as well as acting as liquidator or judicial manager of banking institutions.
The Banking Act has already been amended to give effect to the DPCâ€™s functions.