DCGC to get Rs 250 million

KATHMANDU: The government is providing a quarter of billion rupees to Deposit and Credit Guarantee Corporation (DCGC) to increase its paid-up capital.

“The government is giving Rs 250 million to us in next few days,” said deputy general manager of DCGC Jagadish Chalise. This additional support from the government will increase the paid-up capital of the corporation to Rs 480 million from the present

Rs 230 million.

The financial contribution from the government to the corporation is in line with the provision announced in the budget for the present fiscal year to fortify the corporations’ ability to provide deposit insurance service to the banks and financial institutions. The budget has announced that the government will be investing additional Rs 250 million in DCGC to increase its paid-up capital to Rs 2 billion.

The increased paid-up capital makes DCGC

more capable in insuring the deposits of financial

institutions.

Following the central bank’s directive three weeks ago, the Class ‘B’, Class ‘C’ and Class ‘D’ financial institutions have started insuring their deposits up to Rs 200,000.

“Since then, around 40 development banks and financial institutions have insured their deposits with DCGC,” Chalise said, adding that it will need to undertake the deposit insurance of 15 per cent of the total deposits held by the Class B, C and D financial institutions, as the DCGC need to guarantee the deposits of a natural person up to Rs 200,000.

There are 87 development banks, 80 finance companies and around three dozen Class D financial institutions operating at present. These financial institutions hold a total deposit worth Rs 155 billion. “But we might need to insure deposits worth Rs 30 billion only,” he added.

“DCGC charges Rs 0.2 as a guarantee fee for every Rs 100 worth of deposit.

“We have just insured our customers’ deposits of up to Rs 200,000,” Ace Development Bank CEO Siddhanta Raj Pandey said.

After the Nepal Development Bank was sent to liquidation — for the first time in the country’s banking history — it was thought to safeguard the deposits of the small depositors.

The deposit guarantee of Rs 200,000 will definitely build confidence of the depositors that their hard-earned money won’t be lost, if the financial institution with their deposit goes bust due to any reason.

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