The Corporation for Deposit Insurance (CODI) was established on 24th March 2023 with an objective to support the South African Reserve Bank’s (SARB) financial stability mandate and focus on protecting the qualifying depositors of banks.

CODI will manage the country’s Deposit Insurance Fund (DIF) that will allow for bank depositors to have access up to a stipulated limit of their deposits should their banking institution fail, be liquidated, and placed into resolution, thereby enhancing public confidence in the country’s banking system. CODI is also mandated to promote awareness among financial customers of the protection it offers.

A Deposit Insurance Scheme (DIS) provides a mechanism to ensure a pre-planned, orderly, and efficient provision of protection to depositors and more importantly, depositors will know when they will have access to their deposits at a failed bank.

To fulfil this objective, CODI must establish, maintain, and administer the deposit insurance fund (DIF) in the interest of the qualifying depositors’ covered deposits and promote awareness among financial customers of its protection.

The FSR Act establishes the overarching, high-level framework for CODI’s establishment, with CODI maintaining and administering a dedicated DIS. Utilizing the Deposit Insurance Fund (DIF), CODI will ensure access to covered depositors’ deposits within a reasonable timeframe in the event of a bank failure.

CODI will safeguard banking products with guaranteed and repayable capital amounts, such as savings and checking accounts, while investment products will not be protected.

For instance, in the event of a bank liquidation, CODI will utilize the DIF to compensate covered depositors through electronic funds transfers (EFTs) or via a payout agent bank. The proposed protection for qualifying depositors will be up to a coverage limit of R100,000 per depositor per bank.

All registered banks, including 17 commercial banks, 3 mutual banks, 6 cooperative banks, and 12 local branches of foreign banks are the present members of CODI. Membership to CODI is mandatory and automatic for all registered banks.

Member banks must adhere to the following:

• Furnish CODI with depositor information
• Pay levies and premiums to fund the DIF
• Maintain a minimum liquidity amount, as specified by CODI

CODI will automatically provide protection to deposits, eliminating the need for depositors to apply for coverage. It will safeguard deposits held by both natural and non-financial persons, offering up to R100,000 per qualifying depositor per bank.

The protection under CODI extends to qualifying products with guaranteed and repayable nominal balances. Sole proprietors’ qualifying accounts would receive separate coverage from their personal bank accounts, with a limit of R100,000 if the accounts used for the sole proprietor business can be identified by the bank.

For qualifying depositors holding deposits in foreign currencies, the coverage extends up to the R100,000 limit. In the event of a bank failure, foreign currency balances will be converted to South African rand before depositor compensation is provided.

Upon its establishment, CFIs will not be members of CODI, but CODI will take steps to incorporate CFIs into the deposit insurance framework.

CODI will provide coverage for positive balances in transactional or savings accounts held by a qualifying depositor in the event of their bank’s failure. However, loan accounts or overdrawn balances on transactional accounts will not be covered by CODI.

Yes, CODI provides protection up to R100,000 per qualifying depositor, per bank.

Unclaimed deposits will remain with the failed bank and the liquidator will manage them according to the creditor hierarchy.