By Namugerwa Martha

The Bank of Uganda (BoU) has seconded an interim team of officials to start the Deposit Protection Fund (DPF) that will see bank customers earn Shs3m in case the bank is closed.

The purpose of the Deposit Protection Fund is to act as a deposit insurance scheme for customers of contributing financial institutions in the case of a bank failure. DPF is funded by regulated financial institutions which pay premiums DPF and is a newly established institution following the enactment of the Financial Institutions (Amendment) Act (FIA) 2016.

In the June 29th released statement, BoU said that  this program will work by ensuring that premiums remitted by financial institutions regulated by the Bank of Uganda are securely maintained and invested prudently therefore the Contributing institutions will be Commercial Banks, Credit Institutions and Microfinance Deposit-taking Institutions.

The Financial Institutions Act grants the BoU power to appoint DPF as receiver or liquidator of a financial institution if the need should arise.

DPF will pay off depositors up to an amount of Shs3, 000,000 if a financial institution is closed; however, the possibility of raising this limit is being reviewed,” the Central Bank said in a statement.