THE Deposit Protection Corporation (DPC) will reimburse 90% of Trust Bank depositors after the financial institution was closed by the Reserve Bank last week, an official said.
The central bank last week cancelled Trust Bank's banking licence over allegations of abuse of depositors' funds and violation of the Banking Act.
This marks the second time in eight years that Trust Bank has lost its banking licence.
DPC business operations director Gift Chirozva told businessdigest this week that they would disburse the current deposit cover of US$500 to depositors once they are appointed as the provisional liquidator.
"DPC will commence reimbursement of deposits once legal processes of appointing the corporation as the provisional liquidator have been finalised," he said.
Chirozva revealed that Trust Bank deposits were about US$17 766 283 as at 30 September 2013.
Under the new Deposit Protection Corporation Act Chapter 24:29, the DPC's mandate has been expanded to involve the liquidation and curatorship of banks. The act enables them to look after the interests of the depositors under the Banking Act.
He revealed that they would reimburse 90% of the 3 452 depositors.
"Trust Bank had about 3 452 depositors as at date of closure" Chirozva said " About 90% of Trust Bank depositors will be reimbursed in full as 3 111 of them have deposit balances of less than US$500"
Chirozva added that depositors with balances above the insurable amount of US$500 would be reimbursed through the liquidation process.
He revealed that payments to depositors of the defunct Royal and Genesis banks were still in progress.
"To date 55 out of 85 Genesis Bank depositors have been paid while 1 214 out of 5 453 Royal Bank depositors have been paid," Chirozva said
The majority of the depositors who have not yet submitted their claims, he noted, have small balances of less than US$20.
Chirozva said that there was a need to capitalise the DPC fund should the Deposit Protection System be effective.
In his fiscal statement last year, then Finance minister Tendai Biti instructed the banking sector to pay US$7,6 million to capitalise the Deposit Protection Fund. Biti also increased the maximum deposit cover, which is the amount of money given to a depositor by the DPC in the event of a bank failure, from US$150 to US$500.
The Bankers' Association of Zimbabwe in its pre-2014 budget, recommended that a cap of 0,3% and a cap of US$50 000 be considered as contributions to the DPC"Inadequate funding of the DPC by banks can lead to costly delays in resolving failed banks and to the loss of credibility of the deposit insurance system," Chirozva warned.