The cabinet on Sunday had agreed in principle to enact a long-overdue act to protect people's deposited money, even if a shady bank or any other financial institution declares bankruptcy.
The draft “Bank and Financial Institution Deposit Protection Act 2022” is set to replace the existing Bank Deposit Insurance Act 2000 that covers security of bank deposits only.
The approval was given at the cabinet meeting held with Prime Minister Sheikh Hasina presiding virtually from her official residence Ganabhaban. Others joined it from the Cabinet Division at Bangladesh Secretariat.
As per provision of the new draft law, a client will get a maximum of Tk2 lakh against the funds deposited with the Bangladesh Bank by the company or financial institute as security money if they wind up or become bankrupt, cabinet secretary Khandker Anwarul Islam told the media after the meeting.
As per the draft law, a depositor will get back Tk2 lakh after the liquidation of a bank or non-bank financial institution (NBFI) instead of Tk1 lakh only for bank depositors.
The existing insurance coverage of any bank deposit is Tk1 lakh.
Currently, a depositor will get at least Tk1 lakh in case of closure or liquidation of any bank while there is no insurance coverage for NBFI deposit.
The latest government move came to increase insurance coverage of single depositors of any bank as some confusion and debate were created regarding the protection of depositors' money.
A senior Bangladesh Bank official said that the deposit amount was proposed to be doubled from the existing level as average deposit has been increasing gradually.
The coverage of depositors has been enhanced in line with increased average deposits in the banking system, he further said.
It will help protect the interests of depositors, even if partially, particularly small ones, the central bank official added.
