The South African Reserve Bank published a consultation paper from the Corporation for Deposit Insurance (CODI) proposing a phased increase in deposit insurance premiums to build the Deposit Insurance Fund’s (DIF) own funds and reduce reliance on bank-provided liquidity tier contributions structured as loans. The strategy is intended to support CODI’s 2030 objectives and lower the South African Reserve Bank’s guarantee exposure linked to banks’ liquidity tier contributions. Currently, the DIF is largely made up of liquidity tier contributions on which CODI pays interest at the repurchase rate, with funds invested in South African Reserve Bank call accounts earning the same rate. CODI proposes rebalancing premiums and the liquidity tier over a 10-year period from CODI becoming operational in 2024, with the first change in the 2027/28 financial year, when the premium rate would rise from 0.2% to 0.35% and the liquidity tier requirement would fall from 3% to 2.5%. Subsequent changes are proposed every two years, moving to 0.4% premiums and a 2% liquidity tier in 2029/30, then 0.5% premiums and a 1% liquidity tier in 2031/32, with liquidity tier contributions eliminated by 2033/34 while premiums remain at 0.5%; CODI notes the plan may need adjustment if significant resolution support is required. Feedback is requested from banks on the rationale, timeline and potential impacts, with comments due by 24 October 2025. CODI will perform annual fourth-quarter assessments to inform any adjustments (subject to Board approval), and finalised premium and levy changes must be submitted to the Minister of Finance for tabling in Parliament before amendments take effect.
South African Reserve Bank 2025-09-22
South African Reserve Bank’s deposit insurer consults on a 10-year plan to raise deposit insurance premiums and phase out liquidity tier loans
The South African Reserve Bank released a consultation paper from the Corporation for Deposit Insurance (CODI) proposing phased increases in deposit insurance premiums to strengthen the Deposit Insurance Fund and reduce reliance on bank-provided liquidity tier contributions. The plan outlines premium increases from 0.2% to 0.5% and a reduction in liquidity tier requirements from 3% to 1% by 2033/34, with adjustments contingent on resolution support needs. Feedback from banks is sought on the proposal's rationale, timeline, and impacts.