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Financial and Banking stability is one topic that has received increased attention from central banks, government, market players and deposit insurer. As a deposit insurer, DCGF has started the deposit guarantee scheme in Nepal from the year 2010. Deposit guarantee is recognized internationally 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 insured deposits placed with banks in the unlikely event of a bank failure. DCGF
has given the statutory responsibility to perform both the credit guarantee and deposit guarantee by company act. The existing board representation and capital portfolio by government (87.06% of total capital of Rs.1000 million) and central bank (11.29%) in DCGF shows that it is a government sponsored and administered separate entity. Generally, Deposit guarantee system is a Government sponsored scheme.
In Nepalese deposit guarantee scheme, DCGF has fixed the rate of premium of 0.2% on guaranteed amount to member institutions. The coverage of deposit guarantee limit is up to Rs 2,00,000 (USD 2800) per individual depositors per member institutions on saving and fixed deposit only. The member institutions are commercial banks, Development Banks, Finance companies and Micro-credit development Banks licensed under the BAFIA Act 2002 by Nepal Rastra bank.
