SA Reserve Bank establishes new entity

The South African Reserve Bank has established the country’s first deposit insurance body, the Corporation for Deposit Insurance (CODI), to help protect bank depositors as well as with confidence in the financial sector.CODI became a legal entity on 24 March, and the move makes protection of those with money in a bank explicit, rather than the "implicit" protection already on offer, Reserve Bank governor Lesetja Kganyago has said previously.In the past, the government compensated depositors for their losses on a case-by-case basis, meaning taxpayers had to bear the cost of the failure of banks. When a bank failed, there was uncertainty about which depositors would be compensated, the amount of protection provided and where the funding would come from, the SARB said in October.CODI's primary responsibilities include establishing, maintaining and administering a deposit insurance fund to protect the banks’ clients, the SARB said on Monday. It is also tasked with informing the depositors of its benefits and limitations should a bank be placed into resolution, which refers to a bank failure deemed too important for financial stability or economic reasons for normal insolvency proceedings.Seventeen commercial banks, three mutual banks, five cooperative banks and 13 local branches of foreign banks will become members of CODI upon its establishment, the Reserve Bank said in October. ODI’s protection will be automatic, meaning qualifying depositors will not have to apply for protection of up to R100 000.New legislation is required for CODI to become operational in 2024, and will specify how much cover depositors will get. The legislation is expected to be passed through Parliament this year.While CODI is a statutory body and a subsidiary of the SARB, it has an independent board which will manage and oversee its affairs. CODI has been collaborating with South African financial institutions and other stakeholders, including the World Bank, to ensure a smooth implementation of the deposit insurance scheme.CODI is part of the Twin Peaks regulatory reforms following the 2008/09 global financial crisis. Its establishment supports the SARB’s mandate of protecting and enhancing financial stability by monitoring the financial environment and mitigating systemic risks that might disrupt the financial system, the statement read.-Fin24

SA Reserve Bank establishes new entity

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Namibian Sun 2025-04-04

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SA Reserve Bank establishes new entity

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Namibian Sun 2025-04-04

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