Deposit Insurance Fund In Progress
The South African Reserve Bank (SARB) has established South Africa’s very first deposit insurance fund to protect bank depositors and instil further confidence in the financial sector. This insurance body, known as the Corporation for Deposit Insurance (CODI), was officially instated on 24 March 2023 and solidifies the explicit protection of individuals with cash deposits held in the banking institution in South Africa.
Understanding The Corporation for Deposit Insurance (CODI)
Previously, the South African Government has extended compensation to depositors who have experienced loss on a case-by-case basis, which meant that taxpayers were liable for the cost of bank failure. With CODI, banks are governed to contribute to deposit insurance to protect clientele. As a result, CODI is primarily responsible for establishing, maintaining, and administering this deposit insurance fund. It is also responsible for informing depositors of benefits and limitations in the case of resolution.
Under the protection of the CODI, qualifying depositors will receive up to R100 000 in automatic coverage, with no need for an application.
CODI is a component of the Twin Peaks regulatory reforms that followed the 2008/09 global financial crisis. With its establishment, the SARB aims to protect and promote financial stability by monitoring the financial environment and reducing systemic risks that may disturb the financial system.
At the MMS Group, we care about our clients and the financial feasibility of their businesses. If you want to know more about how our team can make a difference to your audit, tax, and accounting needs, please contact us here.
General blog of business interest to keep clients informed with key industry developments.