The maximum payout to depositors, in prescribed circumstances pursuant to Section 18 (1) of the Deposit Insurance Act (DIA) was increased from J$600,000.00 to J$1,200,000.00. The increase which is effected through a Ministerial Order has been approved by both Houses of Parliament. The increase will take effect August 31, 2020, after publication in the Gazette. At this threshold, approximately 97 per cent of all accounts at deposit taking institutions are covered under the Deposit Insurance Scheme (DIS).
The DIA, which allowed for the creation of the Jamaica Deposit Insurance Corporation (JDIC) to establish and manage the DIS, was enacted in 1998. Under the DIS, deposit insurance protection is provided to depositors of commercial banks, merchant banks and building societies (member institutions/policyholders).
Minister of Finance and the Public Service, Dr. the Hon. Nigel Clarke noted, “The doubling in the maximum payout under the Deposit Insurance Act will help increase depositors’ confidence in deposit taking institutions, support market discipline, and of course ensure continued financial system stability.”
JDIC periodically reviews its deposit insurance coverage framework to ensure its continued credibility and adequate protection of depositors. Increases are considered based on various factors, including type of deposit products, composition and size of deposits, developments in the regulatory and policyholders’ environment and the wider macroeconomic environment including the impact of inflation and exchange rate.
Since JDIC’s commencement of operations, the insurance coverage was previously increased twice prior to this increase. It was increased from J$200,000.00 to J$300,000.00 in 2001 and then to J$600,000.00 in 2007.