Source: ClassFMonline – Finance Minister Seth Terkper has lauded the passage of the Depositors’ Protection Bill.
Parliament Monday July 4 passed the bill to safeguard customers’ deposits with banks, saving schemes, and microfinance institutions.
The bill comes in the wake of a series of microfinance scandals, which led to some clients losing their lifetime savings. The bill seeks to protect depositors and also allow for depositors to claim compensation against such losses.
Mr Terkper, speaking to Class Business News, said the law would create an efficient and stable financial system in the country.
“Now we all heard about the global financial crises where because of certain developments with the banking and financial institutions, a lot of depositors lost their money. Sometimes, government has to step in, in some cases if the funds are insured up to a certain limit, then the depositor will not suffer a catastrophic loss,” he stated.
“The most recent example is the DKM [Diamond Microfinance] scandal where depositors lost their money…often, because of schemes, charlatans and all kinds of tricksters who may do that or sometimes it is just mismanagement.
Sometimes employees mismanage, the owners may not be aware, so the best example, especially if you travel to the United States, you will see that most of their financial instruments that come out, whether statements or other banks put FDIC-insured.
FDIC is the Federal Deposit Insurance Corporation and the scheme works this way: the banks and depositors pay a little amount when they deposit their money and the corporation, which is established by this law, would take those funds and buy an insurance from insurance companies and from financial institutions and so when events happen like DKM and others, then you are assured that you will be reimbursed not necessarily to the full amount, but, at least, you will recover a certain amount,” he explained.
