The Minister of Finance Planning and Economic Development Matia Kasaijja has today unveiled Deposit Protection Fund of Uganda (DPF) to act as a deposit insurance scheme for customers depositing money with commercial banks, credit institutions and micro finance credit making institutions.
The fund was initiated in 1993 under the Bank of Uganda statute and later fell under Financial Institutions Act 2004 as amended while in 2017. It became an independent body with the appointment and inauguration of Board of directors.
Kasaijja told journalists that Government made a decision to increase deposit insurance limit from Shs 3 million to Shs10 million.
As a result of closure of various commercial banks such as Teeffe Bank, Greenland Bank and the most recent Crane Bank that made many customers lose their money, DFP will ensure customers get their money (deposits) in case a bank is closed.
However according to Kasaijja, depositors will get their money that is Shs10 million and below; meaning that customers whose deposits are beyond Shs10 million will only get the exact amount and face the balance loss.
Meanwhile, customers whose deposits are below Shs10 million will get their full amount.
“The Government has taken a strategic decision to increase the deposit insurance from Shs3 million to Shs10 million. This is on view of the fact that the current limit was put in place in 1997. The limit has therefore been revised to reflect the macroeconomic changes which Uganda has witnessed over the past 20 years,” said Kasaijja.
The macroeconomic changes include substantial growth of deposits in the sector, inflation and foreign exchange rate movements among others.
Kasaijja added that approximately 98% of all bank accounts in the sector will be fully insured.
The Fund contributes to enhanced public confidence in the financial sector by ensuring that depositors are paid their protected deposits in time in the unlikely event that an institution closes.
The Minister further said that Government is committed to putting in place policies which will expand the mandate of the fund to contribute more to the financial sector stability of the country because the current role of DPF is relatively narrow.
Some of the contributing institutions include Centenary Bank, DFCU Bank, Orient Bank, Finance Trust Bank, Standard Chartered Bank, Finca Uganda among others.
He called on the general public to place their savings in formal financial sector.
“The public is hereby encouraged to place their savings in the formal financial sector. This will lead to enhanced levels of financial inclusion and result in the inclusive development of Uganda.”
Meanwhile, the Minister announced the inaugural International conference on deposit insurance which will be hosted by DPF and Bank of Uganda on 15th September this year under the theme “why deposit insurance” and aim at how DFP can greatly contribute to financial sector in the world.