FAQs

? Does the deposit insurance protection cover all types of deposits?

Not all deposits are protected. The following deposits are excluded from protection by DIC Act and Regulations:

Government deposits
Inter-bank deposits
Deposits which serve as collateral for a loan
A deposit that belongs to a shareholder, director or senior management official of the bank
A deposit held in a foreign branch or subsidiary of a bank

? Which types of deposits are protected?

The followin types of deposits are eligible for protection:

Savings deposits
Fixed/time deposits

Note: Such deposits may be denominated in local or foreign currency

? When does the Deposit Insurance Corporation reimburse the insured deposits?

Whenever a bank is closed on account of insolvency or non-compliance and liquidation is determined as a resolution option, payment of insured deposits of such a bank shall be made by Deposit Insurance Corporation.

? When should the depositor of a closed bank file a claim with Deposit Insurance Corporation?

The depositor of a closed bank should file a claim of the insured deposit within a reasonable time following issuance of a closure order by the Registrar of Financial Institutions and liquidation has been determined to be the resolution option on account of insolvency or noncompliance. Normally the time of filing the claim will be announced together with the notice calling for depositors’ claims by Deposit Insurance Corporation.

? How long does it take for DIC to settle claims for insured deposits?

Claims for insured deposits are settled within 45 days provided that the claim is submitted within the prescribed time and the required documentation is duly completed.

? What about deposits held by sole proprietorships, partnerships or companies?

The maximum protection for sole proprietorships, partnerships, and company accounts is the same as that of individuals, which is currently K3,000,000.00 per person per bank.

? Are foreign currency denominated accounts covered? If yes, up to how much is covered?

Foreign currency denominated accounts are protected and payable in Malawi Kwacha equivalent, up to the maximum limit of K3,000,000.

? Do I have to register or apply to be covered by Deposit Insurance Corporation?

No. Deposit Insurance Corporation’s protection is automatic. Depositors do not have to apply. By law, banks will provide depositors’ information to Deposit Insurance Corporation.

? As a foreign national living in Malawi, is my account maintained in a commercial bank in Malawi eligible for deposit protection?

Yes. Nationality/residential status of a depositor does not affect the eligibility of a depositor for deposit protection.

? What is the Deposit Insurance Corporation (DIC)?

The Deposit Insurance Corporation (DIC) is a statutory body established under the Deposit Insurance Corporation Act 2022 whose main objective is to provide protection to depositors against risk of losing their eligible deposits arising from a failure or closure of a bank and thereby maintaining public confidence in the banking system.

? What is the benefit of deposit insurance to the financial system?

The benefits of deposit insurance to the financial system include:

Deposit insurance promotes public confidence in the financial system by protecting depositors against the loss of their insured deposits and therefore contributes to financial stability;
The protection is provided automatically once a depositor opens an account with a member institution. No application or registration is required; and
Promotes financial inclusion.

? What is deposit insurance?

Deposit insurance is a mechanism established to protect depositors against loss of their insured deposits in the event of failure of a licensed bank.

? What are the main functions of the Deposit Insurance Corporation?

The main functions of Deposit Insurance Corporation include:

To assess and collect premiums from banks;
To manage the Deposit Insurance Fund;
To reimburse depositors’ insured deposits in case of failure of a bank;
Resolve failing banks upon appointment by the Registrar of Financial Institutions;
Act as a statutory manager or liquidator of banks upon appointment by the Registrar of Financial Institutions;
Supervise banks upon permission by the Registrar of Financial Institutions; and
Provide financial assistance to banks in case of financial difficulties.

? Who is a member of the Deposit Insurance Scheme?

Currently, members of the Deposit Insurance Scheme in Malawi include all commercial banks that are licensed and regulated by the Registrar of Financial Institutions.

? What about other financial institutions that collect deposits from the public?

In future, the Board of Deposit Insurance Corporation may prescribe other categories of financial institutions to be members of the Deposit Insurance Scheme.

? What is the deposit insurance protection limit?

Currently, the Deposit Insurance Corporation protects eligible deposits up to K3,000,000 per depositor per bank.

? Why is the protection limit K3,000,000?

The primary objective of deposit protection is to cover small depositors. At that limit, 93% of all deposit accounts are fully covered. However, the limit is subject to revision from time to time to align with economic conditions.

? What if a depositor has several deposit accounts with the same bank?

All deposit accounts held by the same depositor will be aggregated and the maximum protected amount is K3,000,000. DIC covers per depositor and not per account.

? What if a depositor has balances above the cover limit?

Deposit balances above the cover limit are payable through the liquidation process after the assets of the closed institution have been sold off.

? What if a depositor has deposits in several member banks, will all the deposits be aggregated for deposit insurance purposes?

Deposits in different member banks are protected separately. The K3,000,000 protection limit is applicable per depositor per bank.

? What are the benefits of deposit insurance to depositors?

Protection of eligible deposits in member banks at no cost to the depositors and reimbursement of the insured deposits in case the respective bank fails.