Legislators call for more robust deposit protectio...

Legislators call for more robust deposit protection frameworks

Nyashadzashe Ndoro

CHIEF REPORTER

Zimbabwean legislators engaged in a heated debate on Thursday over the efficacy of the Deposit Protection Corporation Act (DPC Act), with several lawmakers highlighting need for tight legislative framework to better safeguard depositors' funds.

The discussion stemmed from a motion raised by Murehwa West MP Farai Jere, who called for the urgent need to strengthen the Deposit Protection Corporation to prevent a repeat of bank failures witnessed in the past.

Highlighting the potential dangers of complacency, Jere remarked, "It is just by sheer luck and God’s grace that we have not had any bank closing up to today... We were going to have a disaster Mr. Speaker Sir."

Jere proposed incorporating the DPC into the bank licensing process.

"One of the first suggestions that I wanted to put to this House Mr. Speaker Sir, is that in the very beginning process of registering a bank, I think it is prudent and important that these very same institutions, the Deposit Protection Corporation must be incorporated into the systems that vet the banks to be given licences," he argued.

Pelandaba - Tshabalala constituency MP Joe Tshuma weighed in on the debate, and echoed similar concerns. He lamented the lack of emphasis on preventative measures.

"We cannot allow people to come in and manage banks. After that they are living lives that are beyond reasonable means. They are going off on holidays and they are giving each other loans from the same banks using the money that is deposited by some people," he stated.

While acknowledging the importance of depositor protection, another legislator Rechard Ziki, broadened the conversation by proposing a multi-pronged approach to enhancing stability within the banking sector.

"To enhance depositor protection in Zimbabwe, the following steps could be done," he said, outlining a series of recommendations that included increased coverage limits, wider coverage encompassing micro-finance institutions, and stricter regulatory oversight," he said.

Zanu-PF chief whip Pupurai Togarepi said there is a need for the DPC to function as a true insurer, compensating depositors for the entirety of their losses rather than a fraction.

"The idea of the Deposit Protection Scheme is everywhere in the world and it is a very noble idea. I would like to thank our government for coming up with this fund. I think on its own, it will not protect the depositors," he argued.

Several legislators also called for increased transparency within the banking sector, with Togarepi suggesting that the Deposit Protection Corporation collaborate more closely with the Reserve Bank of Zimbabwe to identify early warning signs of potential bank failures.

The debate comes amidst public anxiety concerning the security of deposited funds, with many Zimbabweans still harbouring memories of past bank failures. The deliberations are likely to culminate in a series of amendments to the DPC Act, with the ultimate goal of fostering a more secure and stable banking environment in Zimbabwe.