Mega Bank Nepal has become the first commercial bank of the country to get its individual deposits up to Rs 200,000 insured by the Deposit and Credit Guarantee Corporation (DCGC).
DCGC General Manager Bhola Prasad Sharma Adhikari and Mega Bank CEO Anil Shah signed an agreement to this effect amid a function on Tuesday. The budget for the current fiscal year decided to implement the deposit insurance policy in A class financial institutions from the current fiscal year. A majority of B, C and D class FIs have already got such deposits guaranteed. Shah said Mega's deposits worth Rs 3 billion of 28,000 individual depositors have been insured. The bank's total deposits stand at Rs 5 billion. According to Shah, the move is aimed at assuring customers that the bank has taken enough measures for the safety of their deposits.
With Mega insuring its deposits, DCGC expects that other commercial banks will also follow suit. DCGC chairman Bhaskar Mani Gyawali said other BFIs are also in the process of getting their individual deposits up to Rs 200,000 insured. "If they fail to do so within a few months, the central bank will adopt some strict measures," said Gyawali, who is also the spokesperson for Nepal Rastra Bank. DCGC has fixed the annual premium of the insurance at 20 paisa per Rs 100. As per the Deposit insurance Bylaw 2010, the premium will not be refunded to member BFIs. BFIs failing to maintain their capital adequacy ratio will have to pay an additional 10 paisa premium on half yearly basis. Insurance can be claimed if any BFI is liquidated.
After the liquidation of Nepal Development Bank in 2009, the deposit insurance provision was sought as a safety measure to protect depositors' interest. According to DCGC, it has insured deposits of 77 development banks, 69 finance companies and a microfinance development bank after commencing of the job six months ago.
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