Zimbabwe recovers $35 million from six failed banks

The Depositors Protection Corporation (DPC) has recovered $35 million from six closed banks, but has only reimbursed $3.2 million to 11 000 depositors, chief executive John Chikura said.

This is a slight increase from the $3.1 million repaid to depositors by DPC as of June last year.

The recovered funds and reimbursements cover depositors of Afrasia Bank, Allied Bank, Interfin Bank, Trust Bank, Royal Bank and Genesis Investment Bank.

Chikura said that of the six banks, only Genesis, which surrendered its licence in June, 2012, had paid off nearly all its depositors.

He attributed the slow pace of reimbursement to litigations and legislative bottlenecks.

“The challenge is that it’s a long process to repay all the funds owed to depositors. It takes time, collections take long as well because you know we use lawyers. They follow up on debtors, some of the cases spill into courts, and you know how long court cases take, some take up to a year,” he said.

Chikura said the process would be quicker if the Reserve Bank of Zimbabwe (RBZ) is designated with a court status to immediately facilitate and authorise the compensation of depositors rather than seeking the court’s approval which takes time.

The DPC was established in 2003 through an Act of Parliament to, among other responsibilities compensate depositors in the event of a bank’s collapse. All deposit-taking financial institutions pay a premium of two percent of total deposits to the Deposit Protection Fund.

Chikura said the DPF was invested in Old Mutual and Infrastructure Development Bank of Zimbabwe (IDBZ.)

“We have invested in Old Mutual and IDBZ because we don’t want to invest in banks which we are protecting depositors against. But I won’t give you the figures but what I can tell you is that we have enough to pay depositors should any bank fail or should any banks fail today,” he said. – The Source

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