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Dhaka Tribune

Amended bank deposit insurance bill to offer double compensation

A depositor currently gets a maximum of Tk1 lakh as compensation within 90 days if any scheduled bank or FI gets liquidated

Update : 12 Jun 2023, 05:45 PM

A Bank Deposit Insurance Bill (Amendment) 2023 was placed in parliament on Sunday, to double the amount of compensation for depositors. 

A depositor currently gets a maximum of Tk1 lakh as compensation within 90 days if any scheduled bank or financial institution goes into liquidation.

The amended law proposed to increase this compensation to Tk2 lakh.

Finance Minister AHM Mustafa Kamal placed the bill, which was sent to the parliamentary standing committee of the Finance Ministry for more scrutiny.

The committee was asked to submit its report within 30 working days.

In Bangladesh, deposit insurance was introduced in August 1984 while the amount of insurance coverage was Tk60,000, which was later increased to Tk1 lakh.

Only banks were mentioned in the previous act whereas financial organizations have been included in the proposed law.

Besides, a Deposit Insurance Trust Fund (DITF) of Bangladesh Bank will be renamed "Deposit Safety Trust Fund."

The following types of money shall be deposited to the fund - (a) money received from insured banks as well as financial institutions; (b) income received from the bank wound up under section 7; (c) money received from the investment of money from the fund; and (d) money received from other sources.

According to the proposed bill, the fund shall not be spent except for payment of debt to the depositor or creditor of the bank wound up.

The proposed act suggested that Bangladesh Bank could primarily restrict deposits from being received by the banks and financial organizations if they fail to pay insurance premium for two consecutive times.

Moreover, the central bank will have the authority to shut or liquidate them if the same incident is repeated for a third time.

After the order of liquidation of banks and financial organizations, Bangladesh Bank will have to pay insurance money or a maximum of Tk2 lakh to the depositors from the Deposit Safety Trust Fund.

Each depositor will get the same amount of compensation even if they had several accounts with the banks or financial organizations, the draft act stated.

Deposit Insurance Systems is an institutional initiative to protect depositors against the loss of their deposits in the event that a scheduled bank goes into liquidation.

All scheduled banks or commercial banks, including the branches of foreign banks functioning in Bangladesh, are insured by the Deposit Insurance Systems. 

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