KATHMANDU, JUN 27 -
The much hyped policy on deposit insurance introduced through the budget for the current fiscal year was not implememted this year as the government failed to bring any legal mechanism to implement it.

The “dilly-dallying” on the part of the Ministry of Finance (MoF) was the main reason for the non-implementation of the scheme. Although the Deposit and Credit Guarantee Corpor-ation (DCGC) sent a draft of an Act governing the scheme in October 2009, there has been no progress on the issue.

Keshav Acharya, senior economic advisor at the Ministry, said the government failed to implement the programme this year due to administrative dilly-dallying. “The bureaucracy did not work as per the spirit of the political level from where it was introduced,” he added. As per the budgetary provision, deposits less than Rs. 200,000 would be insured.

He, however, said the policy will be on in the budget for the next fiscal. The policy was introduced against the backdrop of liquidation of Nepal Development Bank. The bank collapsed due to bad governance on the part of its promoters.  The deposit insurance would have benefited depositors to have back their deposits from the guarantor company. As of September 2009, around Rs. 65 billion deposit of commercial banks below Rs. 200,000 would have been insured.

A total of 3,100,737 saving depositors and 108,128 fixed account depositors’ money would have been insured had the policy been implemented.

However, bankers said the amount to be insured would have been higher if the depositors of more than Rs. 200,000 ws also included. President of Nepal Bankers’ Association, Sashin Joshi, said they were ready to support the idea of deposit insurance, but they added that there should be a separate agency to insure deposits and another body to regulate the deposit insurer.

With the new fiscal year approaching, a discussion on this issue is on in the MoF. According to DCGC general manger Chandra Man Maleku, the discussions are concentrated on the capital of body insuring the deposits. The DCGC has proposed

a paid up capital of Rs. 1 billion for the company that insures deposits. It has also been expressing confidence that it could insure deposits if its capital and human resources are increased.

Posted on: 2010-06-28 09:35

Post Your Comment

Please note that all the fields marked * are mandatory.

* Full Name

* Address

* Email Address

* Comment
[Some of the HTML tags you can use : <b>, <i>, <a>]

* Captcha

Get another CAPTCHA code