Deposit guarantees now at N$10 million

This amount is saved with the Namibian Deposit Guarantee Authority and is only 0,009% of the N$113 billion balance at the end of the year.The authority became operational in 2020 and administers the Deposit Guarantee Scheme, which aims to protect depositors against the loss of their deposits by compensating them in the unlikely event of a commercial bank failure. In its recently released annual report for the 2021 financial year, it was indicated that the N$10,2 million is currently invested through the Deposit Guarantee Fund, and has earned N$278 490 in interest.This scheme adopts a guarantee coverage limit of N$25 000, which is currently in effect, and at this coverage limit, the scheme was established to cover more than 90% of current depositors. “The scheme therefore ensures that depositors have access to all or a portion of their funds in the event of a bank failure within a specified time period. “It also protects against panic withdrawals by assuring depositors of the safety of their deposits even if a bank fails, reducing the likelihood and scale of such a failure culminating into a crisis for the entire financial system,” reads the statement by the authority.All Namibian banking institutions and branches of foreign banks and building societies are required to be members of the Deposit Guarantee Scheme and pay the scheme annual premiums.According to the authority, the banking industry remained stable despite the impact of Covid-19 in 2021.These challenges were evident in the deteriorating quality of assets in the Namibian banking sector, as well as in the observed increase in non-performing loans, particularly in 2020. “However, the sector proved more resilient to these shocks, remaining sound while operating efficiently and effectively. Total banking sector assets continued to grow, with liquid assets and capital well over the required statutory thresholds,” the authority says.The report is available on the Bank of Namibia's website. Email: bottomline@namibian.com.na

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