The Corporation for Deposit Insurance (CODI) is South Africa’s deposit insurance scheme.

CODI, a wholly owned subsidiary of the South African Reserve Bank (SARB), is mandated by law to protect qualifying bank depositors in the unlikely event of their bank failing. It became operational on 1 April 2024.  

CODI manages the Deposit Insurance Fund (DIF), which it will use to give qualifying depositors with positive balances in their accounts in qualifying products up to R100 000 if their bank should be placed in resolution. This measure enhances public confidence in the country’s banking system. The establishment of CODI supports the SARB’s mandate to protect and enhance financial stability.

In addition to safeguarding depositors, CODI operates under a ‘paybox-plus’ mandate. This means it has additional responsibilities to support various resolution strategies determined by the SARB, as the Resolution Authority (RA). These responsibilities may include providing a secured loan to the bank in resolution, entering into a loss-sharing agreement with the bank or entity assuming liability for covered deposits, or providing a guarantee for the bank’s obligations related to the covered deposits.

CODI is also responsible for raising awareness among financial customers about the protection it offers.

Why is deposit insurance necessary?

Although South Africa has a resilient financial sector, deposit insurance further enhances confidence and stability. In the past, when a bank failed, the government would use taxpayers’ money to reimburse affected depositors on a case-by-case basis. With deposit insurance, qualifying depositors with balances in qualifying products will have reasonable access to their covered deposits if their bank fails through CODI’s use of the DIF. Around 100 countries worldwide have implemented a deposit insurance system like the one adopted by South Africa.

CODI timeline

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' issue. As a result, 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. Alternatively, they must have arrangements to recover any public costs from the private sector following the failure of a bank.

The global financial safety net is designed to protect depositors and enhance financial stability. It consists of 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 a member of the G20, South Africa has been actively working to improve financial stability. Learning from the 2008–09 crisis and domestic experiences, the country adopted the 'Twin Peaks' model in 2011 to reform the regulatory and supervisory system for financial institutions and market infrastructures. This model, outlined in the Financial Sector Regulation Act 9 of 2017 (FSR Act), gave the SARB a clear mandate to maintain and enhance financial stability. It led to the creation of the Prudential Authority (PA), the Financial Sector Conduct Authority (FSCA) and now CODI.

The development of CODI involved extensive public consultation to ensure that all input was considered in designing an effective deposit insurance scheme for South Africa.

Organisational structure

CODI is a statutory body and a wholly owned subsidiary of the SARB. It operates as a separate legal entity with its own Chief Executive Officer (CEO) and Board of Directors (Board). The composition and responsibilities of the Board are specified in the FSR Act. The Board manages and controls CODI’s affairs. The Board, in accordance with the requirements of the FSR Act, established an investment committee responsible for investing funds from the DIF. 

To ensure financial and operational efficiency, CODI outsources most of its support services to the SARB, including but not limited to fund investments, legal services, information technology services and financial services.