The Deposit Protection Corporation (DPC) is mandated under the DPC Act (Chapter 24:29) to pay compensation to protected or insured depositors when a bank closes. To be eligible for deposit insurance, a person has to deposit his/her money in a deposit taking institution (DTI) that qualifies to be a member of the Deposit Protection Fund.
Eligibility for Deposit Insurance
To qualify for deposit insurance, individuals must deposit their funds into a deposit-taking institution that is a member of the Deposit Protection Fund. Only financial institutions registered under the Banking Act (Chapter 24:20) ,Building Societies Act (Chapter 24:02), People’s Own Savings Bank (POSB) Act (Chapter 24:22), Infrastructure Development Bank of Zimbabwe (IDBZ) Act (Chapter 24:14) and Microfinance Act (Chapter 24:30), are eligible for deposit insurance coverage. These include:
- Commercial banks
- Merchant banks
- Finance houses
- Discount houses
- Building societies
- Deposit-taking microfinance institutions
Notably, asset management institutions are not covered under this insurance.
Identifying Protected Deposits
To identify whether your deposit is protected by DPC, the banking institution must indicate in its advertisements that it is a member of the deposit protection scheme or Corporation. It must also have a membership sign displayed at each of its entrances, on its website and on its automated teller machines (ATMs). It must have brochures obtained from DPC containing information about deposit insurance displayed in your institution in a position where you can access them. You can also access more information about DPC on its website www.dpcorp.co.zw.
Compensation Process
In the event of a bank closure, depositors can submit a claim form to DPC to receive compensation up to the maximum coverage limit. If you have different types of accounts in the same bank, for example a savings account and fixed deposit account, then you will receive compensation for each type of account, separately, up to the coverage limit. If you have the same type of account but at different banks, then you will receive compensation for each account in those banks in the event that they close. If you have the same type of account in different branches of the same bank, then those deposits will be added together and compensation will be paid up to the maximum limit. If you own an account jointly with another person, you will be insured separately up to the maximum limit and DPC will determine the proportion of the compensation taking into account information available. This makes it important for you and the other joint owners of the account to submit your respective names, addresses and identity card numbers to the banking institution which holds your joint account. DPC may also request additional information from you and the joint owners of the account.
Additional Considerations
Once the insured amount is paid, any remaining balance above the insured limit will be distributed through the liquidation process on a pro-rata basis. This means that further compensation will depend on the assets realized from the closed bank’s liquidation.