Deposit Insurance Company (DIC) has expressed optimism that the banking sector will remain buoyant as banks report growth in profitability amid economic volatility.
DIC Deputy Board chairperson Abison Chitukula said this on the sidelines of the company’s charitable activity in Chitedze, Lilongwe where, in partnership with Lilongwe District Council, planted trees at Tadala Primary School.
When asked on the prevailing market conditions and how the company is positioned being a new player in the insurance cover for bank deposits, he said things were rosy thanks to the profits by the banks.
Deposit insurance provides cover to bank customers’ deposits in the event of bank failure and currently, the state owned company only covers deposits of up to K3 million which customers can immediately access when a bank collapses.
“The outlook is good, things are stable. As you’ve seen most of the banks have posted profits and for the DIC we are excited that our key stakeholders are performing well because that’s what we need,” Chitukula said.
He further expressed optimism that the country would not likely see a bank failure anytime soon as the banking sector shows a healthy state.
The four largest banks announced they would be making huge profit jumps with National Bank expecting up to K98 billion, Standard Bank K86 billion, NBS Bank K72 billion and FDH Bank K62 billion.
RBM has 60 percent shareholding in the company while Treasury has 40 percent that was established under the support of the Financial Inclusion and Entrepreneurship Scaling project.
Parliament in 2022 passed a law to establish the explicit deposit insurance legislation under which the company was established.
Experts view this as a cover for fiscal pressure as the implicit deposit insurance system would put the responsibility on the government to finance deposits recovery when a bank collapses.
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