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The Corporation for Deposit Insurance (CODI) is South Africa’s Deposit Insurance Scheme (DIS), created and mandated by law to protect qualifying bank depositors in the unlikely event of their bank failing. CODI is a subsidiary of the South African Reserve Bank (SARB) and became operational on 1 April 2024.
CODI manages the Deposit Insurance Fund (DIF) that CODI will use to give qualifying bank depositors access to up to R100 000 of their qualifying deposits should their bank be placed into resolution, thereby enhancing public confidence in the country’s banking system. The establishment of CODI supports the SARB’s statutory mandate of protecting and enhancing financial stability by identifying and mitigating systematic risks that might disrupt the financial system.
In addition to safeguarding depositors, CODI operates under what is known as a paybox-plus mandate, entailing additional responsibilities to support various resolution strategies as determined by the SARB as the Resolution Authority. This may include providing a secured loan to the bank in resolution; entering into a loss-sharing agreement between CODI and the bank in resolution or a person assuming liability for covered deposits of the bank in resolution; or providing a guarantee in favour of the bank in resolution, the SARB or another person in respect of the bank’s obligations in relation to the covered deposits of the bank in resolution.
CODI is also mandated to promote awareness among financial customers of the protection it offers.
While South Africa has a resilient financial sector, deposit insurance brings further confidence and stability to the sector. In the past, when a bank failed, the government used taxpayers’ money to compensate affected depositors on a case-by-case basis. With deposit insurance, qualifying depositors will be given reasonable access to their covered deposits should their bank fail through CODI’s use of the DIF. Approximately 100 countries in the world have a DIS similar to the one South Africa has adopted.
In response to the 2008–09 global financial crisis, the Group of Twenty (G20) tasked the Financial Stability Board (FSB) with developing policies to address the 'too-big-to-fail' problem. The FSB developed, among other standards, the Key Attributes of Effective Resolution Regimes for Financial Institutions, which require jurisdictions to have a privately funded depositor protection and/or resolution fund in place, or, alternatively, arrangements to recover any public costs from the private sector after the failure of a bank.
The global financial safety net is aimed at protecting depositors and enhancing financial stability, and comprises a combination of strong regulation, strict supervision oversight, crisis management tools and an effective resolution framework. CODI is part of South Africa’s financial sector safety net and in the event of a bank failure, it protects the most exposed or most vulnerable bank customers.
As one of the G20 countries, South Africa has also been engaged in enhancing financial stability. The lessons learnt from the 2008–09 crisis and domestic experiences saw the country introduce the 'Twin Peaks' model in 2011 to reform the regulatory and supervisory system for financial institutions and market infrastructures. The model contained in the Financial Sector Regulation Act 9 of 2017 (FSR Act) gave the SARB an explicit mandate to maintain and enhance financial stability. Through it the SARB established the Prudential Authority (PA), the Financial Sector Conduct Authority (FSCA), and now CODI.
The journey to establish CODI has included broad public consultation to ensure that all contributions have been considered in the design of an effective DIS for South Africa.
South Africa has one of the world’s most resilient financial sectors, overseen by a network of institutions aimed at safeguarding its stability and public confidence, collectively known as the financial sector safety net. This network includes the PA that regulates financial institutions and market infrastructures; the SARB that acts as the lender of last resort, offering loans or liquidity to banks that are experiencing financial difficulty; the SARB as the RA that is responsible for the orderly resolution of designated institutions; and CODI. As the country’s Deposit Insurance Scheme, CODI ensures the orderly and timely protection of or access to covered deposits in the event of a bank failure. Another vital component of the financial sector safety net is the FSCA that ensures that financial institutions treat their customers fairly and transparently.
All these institutions are governed by the FSR Act that was enacted following the 2008–09 global financial crisis.
CODI is a statutory body and subsidiary of the SARB. It will be a separate legal entity with its own Chief Executive Officer (CEO) and Board of Directors (Board). The Board will oversee CODI’s affairs. To be financially and operationally effective, CODI will outsource its support functions to the SARB, including the investment of funds, legal services, information technology services and financial services.
The Financial Sector Laws Amendment Act 23 of 2021 (FSLAA), prescribes the Board's composition, which includes the following members:
Click here for the board members' biographies.
Press releases
Statement about establishment of CODI coming into effect
Board members' biographies
Member banks
If you have further questions about CODI, or deposit insurance please do not hesitate to send them to CODI@resbank.co.za.
