SOUTH AFRICA: DRAFT DEPOSIT INSURANCE REGULATIONS
The Minister of Finance, in terms of the Financial Sector Regulation Act, 2017 (FSRA), published the draft Deposit Insurance Regulations on 4 July 2023 (Draft Regulations), accompanied by a statement of need, and a notice inviting written submissions from the public on the Draft Regulations (Notice).
The Draft Regulations were published following the amendments to the FSRA by the Financial Sector Laws Amendment Act, 2021, and the establishment of the Corporation for Deposit Insurance (Corporation) as a legal entity with effect from 24 March 2023.
The Corporation was established to manage South Africa’s Deposit Insurance Fund (DIF) which will allow for bank depositors to have limited access to their deposits should their bank fail, be liquidated and placed into resolution. The Corporation and the DIF will therefore protect bank depositors and enhance the public’s confidence in South Africa’s banking system.
Whilst the FSRA provides the overarching framework for the establishment of the Corporation, the Draft Regulations set out the procedural and administrative requirements relating to the functioning of the Corporation. This includes details relating to, among others, the:
- qualifying depositors the Corporation will cover;
- qualifying products the Corporation will cover;
- maximum amount the Corporation will cover in respect of a qualifying depositor’s balances;
- public awareness duties of the Corporation and banks;
- reporting obligations of banks; and
- responsibilities of banks, depositors, the Corporation, and other persons, for the Corporation to be able to promptly reimburse qualifying depositors when a bank is in resolution.
The Draft Regulations are intended to become effective on 1 April 2024 when the Corporation becomes operational and will apply to all banks and branches registered in terms of the Banks Act, 1990; Mutual Banks Act, 1993; and the Co-operative Banks Act, 2007.