November 1, 2019

Fund To Protect Clients of Collapsing Banks Reaches Rwf 3.7b


The Deposit Guarantee Fund (DGF) set up by the Central Bank despite fierce opposition by commercial banks is reporting good results after 4 years in operation.

The Fund, established in June 2015, was to give protection to small depositors against risks of losing their deposits arising from failure of a bank or microfinance institutions.

Commercial banks and microfinance are required to contribute 0.3 per cent of their total annual deposits as premiums in the deposit guarantee fund.

In its annual report July 2018-June 2019 released this Friday, the National Bank of Rwanda (BNR) said it collected Rwf 1.454 Billion from Banks and Rwf 138.036 Million from MFIs for the past year.

As a total, the Fund now has Rwf 3.769billion in its coffers.

Rwanda’s banking sector is composed of 11 Commercial Banks, 1 Development Bank, 1 Cooperative Bank and 3 Microfinance Banks.

The Microfinance Banks have 3,779,860 clients or 54 percent of the total adult population.

By having a Deposit Fund, the Central Bank ensures that public confidence in the banking and financial system is maintained. When a bank collapses, small depositors are assured of getting their money back immediately.

When plans for the Fund were mooted, commercial banks said it would increase the burden on them, and vowed to transfer the cost on to their clients.

The banks already had a 5% legal reserve ratio which the central bank has maintained. Another 20 per cent is deployed in the secondary market. The banks said these deposits with the central reduce how much they have to be able to lend out as loans.


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