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Protection Corporation Bill, 2010 (Updated)
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Protection Corporation Bill
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of Assembly amended this Bill by · deleting clauses 36 and
37 and substituting new clauses 36, 37, and 37A, and · amending
paragraph 15(2) of the First Schedule. It was in this amended form
that the Bill was passed by Parliament and submitted for Presidential
assent. To highlight the amendments, the new text is shown in green
font and indicated by footnotes.
has not yet been gazetted as an Act as at 4th January 2012. When
it is gazetted, clause 37A of the Bill will be section 38 of the
Act and the subsequent clauses, starting with the original clause
38, will be renumbered as sections 39, 40 and so on of the Act -
going up by one. Reminder: Section 16 of the Finance (No. 2) Act,
2011 (No. 9 of 2011), which was gazetted on 31st December 2011,
amends the Deposit Protection Corporation Act by amending section
38 (clause 37A in this version of the Bill) and repealing sections
45 and 62 (clauses 44 and 61 in the Bill).
PROTECTION CORPORATION BILL, 2010
banks, building societies and other financial institutions become
insolvent or collapse, for whatever reason, the effects are felt
not only within the financial system but more widely by ordinary
members of the public who stand to lose money they have deposited
with the failed institutions. To lessen the impact of bank failures
on the general public, a fund known as the Deposit Protection Fund
has been established under the Banking Act [Chapter 24:20], to which
financial institutions must contribute and out of which compensation
is paid to people who have deposited money with failed institutions.
The fund is administered by a board of trustees known as the Deposit
The purpose of this Bill is to replace the Deposit Protection Board
with a new statutory body to be called the Deposit Protection Corporation,
which will be largely independent of the Reserve Bank. The Corporation’s
functions will be similar to those of the existing Board, but more
extensive: the Corporation will have power to obtain information
from financial institutions that will allow it to detect early signs
of difficulties within the financial system; the Corporation will
also be given power to administer failed or failing institutions
and, where possible, restore them to financial health.
In more detail, the individual provisions of the Bill are as follows:
Part I: Preliminary
Clause 1 sets
out the Bill’s short title, while clause 2 will define terms
that are used throughout the Bill. The definitions themselves are
Clause 3 will define when financial institutions that contribute
to the Deposit Protection Fund are to be regarded as financially
distressed, troubled or insolvent for the purposes of the Bill.
A financially distressed institution will be one which has failed
to meet the Corporation’s standards for the capital, conduct
and management of financial institutions; a troubled institution
will be one which has been declared troubled by the Reserve Bank
in terms of the Troubled Financial Institutions (Resolution) Act;
and an insolvent institution will be one which is to be wound up
under the Companies Act or is otherwise to be dissolved, or which
is no longer entitled to carry on business in Zimbabwe.
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