September 21: Banks and Financial Institutions have assured the guarantee of at least Rs 1100 billion deposited by the customers. As per the announcement of BFIs to protect the deposits made by small depositors and to build the customers’ trust on banking system, the banks have brought a maximum of Rs 300,000 from each of 33,700,000 customers within the fold of the Deposit and Credit Guarantee Fund.
About a decade ago, the government had made it mandatory for BFIs to guarantee the safety of the deposits in the name of their customers. Initially, the banks were instructed to guarantee the security of at least Rs 200,000 per account which was increased to Rs 300,000 per account three years ago. The government has already decided that the banks must protect at least Rs 500,000 of each account from mid-September of the current fiscal year.
Chief of the fund Ramesh Ghimire informed New Business Age that the state-run programme will assure protection of at least Rs 1100 billion deposited by the customers of banks as of mid-September 2022. He further said that this amount will increase after mid-September as the government has already decided that the banks must protect at least Rs 500,000 per account.
According to the fund, 108 banking and financial institutions have received commitment from the fund for the guarantee of their credit and deposits.
The government had initiated the deposit guarantee programme about a decade ago after the liquidation of Nepal Development Bank. The fund will be responsible to pay the prescribed amount to the customers if the BFIs turn problematic and are unable to return the deposits to the customers.
As per this provision, the fund had earlier paid Rs 110 million to the customers of Himalayan Finance.
Governor of Nepal Rastra Bank Maha Prasad Adhikari says that the concept of deposit guarantee was developed in the 1930s after the banks worldwide turned problematic. He said that Nepal has also put in practice the same concept to protect the deposits of the customers.
Speaking at the 49th anniversary of the fund, Governor Adhikari said that 22 percent of the total deposits of BFIs have been secured so far.