निक्षेप तथा कर्जा सुरक्षण काेष
Deposit and Credit Guarantee Fund

Introduction

Financial stability is one of the topical issues that has been accorded increased attention from central bank, government, market players, borrowers and deposit insurer. As a deposit insurer, Deposit and Credit Guarantee Fund(DCGF) has started the deposit guarantee scheme in Nepal from the year 2010. Deposit guarantee/insurance is recognized globally as an important component of a country's financial safety net and has been implemented in more than 120 countries around the world. It is a system that protects depositors against the loss of their guaranteed deposits placed with banks and financial institutions (BFIs) in the case of unlikely event of the BFIs failure. DCGF has given the statutory responsibility to perform both the deposit guarantee and credit guarantee function through it's own  "Deposit and Credit Guarantee Fund  Act, 2073". In the DCGF Board there has been representation of six from the government and one from Nepal Rastra Bank. Obviously, DCGF is a government sponsored and administered separate entity. Generally, deposit guarantee system is a government sponsored scheme. In Nepal, deposit guarantee scheme is confined to BFIs namely (i) commercial banks, (ii) development banks, (iii) finance companies and (iv) micro credit development banks. DCGF has fixed the premium rate of 0.16 % on guaranteed deposit to all BFIs member institutions. The coverage of deposit guarantee is limited to Rs 3,00,000 per natural individual depositors per member institution applicable on a combination of saving and fixed deposit.

Notice / Update

About Coordination with Government

The Nepal Government has implemented a mandatory deposit guarantee scheme to 'B' class Development Bank, 'C' class Finance Companies and 'D' class Micro finance Development Banks under the provisions of the annual budget of FY 2067/68 and to the Commercial Banks since FY 2068/69. DCGF is assigned to undertake solely the responsibility of deposit and credit guarantee schemes. Similarly, Nepal government has been providing credit guarantee subsidy on a certain level on (i) micro finance and deprived sector credit; (ii) small and medium enterprises (SMEs) credit and (iii) livestock credit.

OBJECTIVES

1. To guarantee the deposit of the natural person depositors held with the commercial banks and financial institutions licensed by Nepal Rastra Bank and to compensate the loss to the depositors in case of legitimate bankruptcy of the member institution.
2. To guarantee the credit advanced by the banks and financial institutions presently in livestock, SMEs including priority sector, deprived and micro-finance sector and to compensate the loss under a risk sharing modality as per the concerned regulation in case of the proven death and permanently infertile of  livestock  and indisputable default of other loans.