THE Managing Director of Stanbic Bank Ghana, Mr Alhassan Andani, has advised depositors to take the first step of protecting their deposits by discriminating between which bank or deposit taking institution they invest in.
He said the introduction of the deposit insurance scheme by the Bank of Ghana (BoG) should be enough reason for customers to ponder over the fact that there was no 100 per cent certainty that they would get their deposits back, hence the need for them to be very careful of where they were keeping their money.
Speaking in an interview with this paper ahead of the GRAPHIC BUSINESS/STANBIC BANK breakfast meeting today, Mr Andani said the introduction of the deposit insurance should help in planting in the decision making framework of customers that there was a risk of loss.
He stated that customers needed to be conscious of which deposit taking institution had the highest probability of losing their money.
In deciding which institution had the highest probability of losing the money, he said customers should consider the interest rates that were being promised since the higher the interest rate the higher risk of losing money.
He urged customers to also look at the how those institutions were conducting their businesses.
“These should be the responsibility of the depositor,” he noted.
He pointed out that what the deposit insurance sought to do was to ensure that in the event of loss of money, the customer would still get something back to still invest or take away.
“With insurance, you will probably not get 100 per cent of what you committed but it leaves you enough space to be able to continue to take risks,” he stated.
He said the Bank of Ghana was introducing the deposit insurance scheme as a way of telling depositors to beware because they might not get their deposits back.
“The central bank is telling you that because it is aware you might not get your deposit back, it is introducing an insurance to ensure to recover part of your money in case there is a loss,” he pointed out.
“The deposit insurance is only to tell you that you are committing your resources and there is an inherent risk that it will be lost and this must be planted in the minds of the decision making of depositors,” he added.
Parliament in 2016 passed the Deposit Protection Act, 2016, which seeks to establish a deposit insurance scheme to protect depositors in the event of bank failure.
The scheme among other things seeks to safeguard the savings of individual depositors in the country in order to build trust in the formal banking system and to contribute to the stabilisation and development of the financial system in Ghana.
To ensure the continuous flow of funds into the scheme, its members, which include banks and other deposit-taking institutions, will contribute an initial one-off premium amounting to 0.1 per cent of the required minimum paid-up capital and annual premium.
Mr Andani also pointed out that it was necessary for individuals to take risk in life, stating that “in this world, nobody has ever gained or sustained his or her life without venturing out of his/her natural habitat or comfort zone. You have to take risks, and in taking risks, you can either prosper significantly or fail,” he mentioned.
“In our modern economy, taking risks is about committing time, resources, people and machinery in a manner that promises a future gain, but in doing all of that, you should understand that it doesn’t always work to favour,” he added.