The Corporation for Deposit Insurance is South Africa’s Deposit Insurance Scheme that ensures that qualifying depositors have reasonable access to their covered deposits should their bank fail.

No. Depositors will not make any payments to CODI for deposit insurance protection. CODI will establish and build a Deposit Insurance Fund (DIF) with financial contributions from member banks.

Qualifying depositors are covered up to a maximum amount of R100 000 per depositor per bank. The R100 000 coverage limit includes both the principal amount of a deposit and interest. A total of 95% of the country’s depositors are fully covered, meaning that 9 out of 10 depositors have up to R100 000 in qualifying products. The remaining 5% are partially covered, which means they have more than R100 000 deposited in qualifying products. For these depositors, CODI will give them access to R100 000; however, their remaining balances will stay in the estate of the failed bank. The liquidator will process these balances in line with the creditor hierarchy.

Qualifying depositors cannot buy extra deposit insurance cover when they have deposit balances of more than R100 000. In the case of a failed bank being liquidated, a qualifying depositor’s balance above R100 000 will remain in the estate of the failed bank. The qualifying depositor can then claim that balance from the estate of the failed bank, which will be handled by the liquidator.

CODI protects banking products where the nominal balance is guaranteed and repayable at par. This means that CODI protects banking products where the depositor is entitled to the full account balance as at a specific date. Qualifying products typically include, but are not limited to, the following account types:

CODI will not cover: 

• deposits by banks; 
• deposits by the non-bank private financial sector, including money market unit trusts, non-money market unit trusts, insurers, pension funds, fund managers and other private financial corporate sector institutions; 
• deposits by government institutions, including local, provincial and national government, public financial sector entities, the Public Investment Corporation (PIC), the Corporation for Public Deposits (CPD), other public non-financial corporations and monetary authorities; 
• accounts where the capital amount is not guaranteed and not repayable at par, such as investment accounts in unit trusts and shares; 
• holdings of commodities; and 
• electronic money products. 

No. CODI’s protection is automatic, so depositors do not have to apply. By law, banks will provide depositors’ information to CODI. Typically, the depositors who qualify for deposit insurance protection include: 

• individual depositors, including minors; 
• non-financial corporate depositors, including sole proprietors; 
• foreign individual and non-financial corporate depositors; 
• deceased qualifying depositors; 
• charitable or non-profit organisations; 
• religious entities; 
• stokvels
• trade unions; and 
• consumer associations

By law, all banks registered in South Africa are members of CODI. This includes all commercial banks, local branches of foreign banks, mutual banks and co-operative banks. 

CODI has published a list of its members which can be viewed at www.resbank.co.za/codi

Depositors do not make any payments to CODI. CODI will use the DIF to protect depositors in the unlikely event of their bank failing by giving them reasonable access to their covered deposits. The DIF will be funded through monthly premiums from banks, loans from the banks to CODI, investment income earned on the DIF’s investments and any surplus levy funds.

CODI became operational on 1 April 2024.

How will I know if I am a qualifying depositor of my bank for deposit insurance protection?

CODI protects retail and non-financial private depositors with products where the capital balance (deposit and accrued interest) is guaranteed and repayable at par. This means that CODI protects banking products where the depositor is entitled to the full account balance as at a specific date, for example, savings accounts and term and notice accounts (demand and fixed deposits).

In terms of CODI’s rules, individuals are qualifying depositors. It is important to note that CODI protects qualifying depositors only when the South African Reserve Bank (SARB), as the Resolution Authority, places their bank in resolution. When this happens, the SARB may decide to liquidate the bank, in which case CODI will reimburse the bank’s depositors up to R100 000 per depositor per bank, subject to the coverage rules which are outlined in the Deposit Insurance Regulations of 2024 (Regulations). If the SARB pursues a different resolution strategy, CODI may provide funding or a guarantee in support of this strategy to ensure depositors have access to their deposits.

Banks are obligated to provide their depositors with information on CODI, including whether they are a qualifying depositor and whether their deposits will be protected or not.

Will the Deposit Insurance Scheme (DIS) cover a stokvel or similar informal savings instruments? If the stokvel has a balance of R100 000 from five different depositors, will each depositor receive R100 000 for a total payout of R500 000?

CODI will protect retail and non-financial corporate depositors. This includes stokvels or informal beneficiary accounts (IBA), up to R100 000 for the combined account balances in the name of the stokvel. 

A stokvel is not the same as a joint account. A joint account is treated differently because the bank is responsible for the recordkeeping related to the account. With an IBA, the stokvel opens a stokvel-type of account at a bank and the members of the stokvel appoint signatories to manage the account on their behalf. The stokvel signatories are not accountable institutions in terms of the Financial Intelligence Centre Act 38 of 2001 (FIC Act), meaning they do not comply with the FIC Act’s recordkeeping responsibilities. CODI cannot rely on their recordkeeping about the members of the stokvel and their holdings in the stokvel. Most banks do not record the details of the stokvel members and their individual contributions to such an account. 

For example, if a stokvel has five accounts in qualifying products, each with R40 000, its qualifying balance or total deposit balance in the name of the stokvel would be R200 000. CODI will protect the stokvel up to R100 000 for accounts in qualifying products held by it. If the bank where the stokvel holds accounts fails, CODI will then give the signatories of the stokvel access to the R100 000 for which it is protected.

If the joint account holders (for example, two account holders) have five joint accounts together, each with R40 000, the total balance would be R200 000. In the records of the bank, they would have indicated how the account balance should be split between account holders. If this was not specified, the balance would be split equally between the account holders if both joint account holders are qualifying depositors who are protected by CODI. In this case, they will each be protected up to R100 000. In the case where the bank in which they have their accounts fail, CODI will provide each of the account holders access to up to R100 000 for their holdings in these accounts.

In terms of the example referred to, CODI cannot give a qualifying depositor access to more than the balance they had in the bank as at the date the bank failed. When looking at the example provided, these are the accounts discussed:

Bank ABC before failure:

• Hangwani and Zintle joint account:         R180 000
• Hangwani cheque account:                    R20 000

If Bank ABC fails, the following would apply:

• Joint account balances with no sharing ratio specified:

R180 000/2 = R90 000 for Hangwani and R90 000 for Zintle

• Zintle will receive access to R90 000 if Bank ABC fails
• Hangwani’s protected balances are R90 000 + R20 000 = R110 000

CODI protects up to R100 000 per depositor per bank; Hangwani will therefore get access to R100 000 if Bank ABC fails. The remaining R10 000 due to Hangwani will remain in the estate of Bank ABC and will be handled by the liquidator in accordance with the creditor hierarchy.

Will bank depositors be liable to pay towards the DIS and if so, how much?

Depositors will not make any payments to CODI.Banks will be required to submit aggregated qualifying and covered deposits to CODI. CODI will use this information to calculate banks’ financial contributions to CODI. There is no direct contribution from depositors to CODI for this protection. 

CODI has established the Deposit Insurance Fund (DIF) from financial contributions from member banks. CODI will use the DIF to give the qualifying depositors of a failed bank access to their money. The DIF will mainly consist of monthly premiums collected from banks, loans provided to CODI in the form of liquidity tier contributions and investment income.

Will CODI protect overdraft accounts/amounts (loans with the bank)?

CODI will cover deposits (positive balances) in transactional or savings accounts due to a qualifying depositor if the account is in the name of a qualifying depositor when their bank fails. CODI does not cover loan accounts, positive balances on credit cards or overdrawn balances on transactional accounts. 

Will CODI protect a savings/interest bearing account (such as a money market deposit with a bank)?

CODI will cover deposits in transactional or savings accounts if the account is in the name of a qualifying depositor. CODI will cover money market deposits if the account is held by a qualifying depositor.

Will CODI protect any unit trusts held with a bank?

CODI does not cover balances a qualifying depositor has in investment products since investments’ capital amounts are not guaranteed and are repayable to the depositor at par. With investment products, there is a risk of loss to the qualifying depositor. Investment products include derivatives, shares, indices, exchange traded funds, debt instruments, bearer instruments, annuities, insurance products, unit trusts, private equity investments by individuals and non-financial corporates and repurchase agreements.

If an individual has multiple deposit accounts at different banks, will CODI protect that individual up to R100 000 at each bank?

Yes. CODI’s protection is up to R100 000 per qualifying depositor, per bank. For example, Mr Smith has four accounts at three different banks:

• Bank A: Savings account             –        R80 000
• Bank A: Transactional account     –        R40 000
• Bank B: Transactional account     –        R70 000
• Bank C: Savings account             –        R300 000

If Bank A, Bank B and Bank C all fail simultaneously, Mr Smith will be covered for R100 000 of his R120 000 (R80 000 + 40 000) at Bank A, R70 000 at Bank B and R100 000 of his R300 000 at Bank C. Any balances that CODI does not cover will remain in the estate of the failed bank. The liquidator will process these balances in line with the creditor hierarchy.

Will CODI cover any education/retirement annuities?

CODI will not cover the balances a qualifying depositor has in an education or retirement annuity at a bank as these are investment products. With investment products, the capital amounts are not guaranteed and repayable to the depositor at par.

Will retirement and education annuities at insurers be covered under CODI?

CODI will not cover any balances a qualifying depositor has in a retirement annuity or education annuity at a bank as these are investment products. If the question refers to the insurer holding funds from a retirement annuity or education annuity/policy at a bank, CODI will not cover financial institutions’ deposits at a bank.

Financial institutions include all financial intermediaries regardless of their form of business, including financial sole proprietors, financial companies, banks, money market unit trusts, non-money market unit trusts, insurers, pension funds, fund managers, private financial corporate sector institutions, monetary authorities and public non-financial corporations.

Was there no insurance on funds in banking institutions before CODI became operational?

Before CODI became operational, when a bank failed the government compensated affected depositors for their losses on a case-by-case basis, which means that taxpayers had to bear the cost of the failure of banks. When a bank failed, there was also uncertainty about which depositors would be compensated, the amount of protection provided and where the funding would come from.

South Africa is among the last Group of Twenty (G20) countries to implement an explicit DIS. Not having an explicit DIS was a gap in the design of the South African financial sector safety net that had to be addressed to promote financial stability. A DIS provides a mechanism to ensure a pre-planned, orderly and efficient provision of protection to depositors and more importantly, depositors will be informed exactly when and how much they will receive should their bank fail.

Is a currency investment account regarded as a deposit?

CODI will cover foreign currency denominated deposit products held by qualifying depositors, provided that the deposits were booked on the balance sheet of a South African bank in a qualifying product. Payout of these balances will be done to a bank registered within South Africa in South African rand (ZAR) using the exchange rate on the date that the bank is closed.

CODI will not cover balances a qualifying depositor has in investment products since investments’ capital amounts are not guaranteed and repayable to the depositor at par. With investment products, there is a risk of loss to the qualifying depositor. Investment products include derivatives, shares, indices, exchange traded funds, debt instruments, bearer instruments, annuities, insurance products, unit trusts, private equity investments by individuals and non-financial corporates and repurchase agreements.

Any non-qualifying accounts or uncovered deposit balances will remain in the estate of the failed bank, to be handled by the liquidator in line with the creditor hierarchy.

What is the ratio of bank deposits/deposit insurance quantity?

At R100 000, about 95% of qualifying depositors are fully covered while about 23% of the total deposit values are covered. This is in line with best practice globally and ensures that the most vulnerable depositors are protected from losses in the event of their bank failing.

Where can I access information on CODI and deposit insurance?

Depositors can access CODI’s webpage at www.resbank.co.za/CODI. CODI publishes the latest information on deposit insurance, including frequently asked questions (FAQs), newsletters, discussion papers and the deposit insurance legislation on this webpage.

Depositors can also access information about deposit insurance from their banks. CODI has provided banks with deposit insurance materials to make available to depositors. Your bank will respond to your deposit insurance questions. CODI also welcomes any questions on deposit insurance from the public at CODI@resbank.co.za.