CB announces mandatory deposit insurance scheme
The Central Bank last week announced a mandatory deposit insurance
scheme, Sri Lanka Deposit Insurance Scheme (SLDIS) effective October 1.
SLDIS has been established under the provisions of the Monitory Law Act
with an initial capital of Rs.1.1 billion provided by the Central Bank,
Governor Ajith Nivard Cabraal said.
The members of the scheme are all licensed banks and registered
finance companies. All deposits of member banks and finance companies,
Government of Sri Lanka, shareholders, directors, key management
personnel, other related parties, deposits held as collateral against
any accommodation granted and deposits falling within the meaning of
abandoned property in terms of the Banking Act will be considered as
eligible deposits under the scheme.
In the event the licence or registration of a member institution is
suspended or cancelled by the monitory board,depositors will be
compensated up to a maximum of Rs.200,000 per depositor. The member
banks and finance companies will participate in SLDIS on mandatory basis
from 01 October the depositors will be entitled to benefit after 01
The premium to be levied on eligible deposits will range between 0.10
percent-0.15 percent per annum and will be required to be paid by member
institutions on monthly or quarterly basis. Such premia will be credited
to a deposit insurance fund which will be operated and managed by the
Monitory Board of the Central Bank. However the fund will be distinctly
separate from the Central Bank and its liability will be limited to the
extent of the fund balance.
Cabraal said that this scheme will enhance public confidence on the
Especially interests of small depositors with low financial literacy
will be enhanced and encouraged, and discouraging unauthorised deposit
taking activities. (GW)