Sierra Leone
Deposit Protection Fund Act, 2023
Act 1 of 2023
- Published in Sierra Leone Gazette 3 on 19 January 2023
- Assented to on 12 January 2023
- Commenced on 19 January 2023
- [This is the version of this document from 19 January 2023.]
Part I – Preliminary
1. Interpretation
In this Act, unless the context otherwise requires—"Bank" means a body corporate licensed by the Central Bank to carry on banking business;"Central Bank" means the Bank of Sierra Leone;"deposit" means a sum of money paid on terms under which it will be repaid, with or without interest or premium, and either on demand or at an agreed time under the legal or contractual conditions applicable and not referable to the provisions of property, service or the giving of security;"depositor" means a person that holds a deposit in a member bank or a specialized deposit-taking institution;"differential premium" means an addition to the amount to the regular premiums based on the risk of the member institutions;"extraordinary premiums" means an addition to the regular premiums where the Fund has made or is likely to make payments to depositors which have been exhausted or are likely to exhaust the Fund;"failed insured institution" means an insured institution whose operating licence has been revoked by the Central Bank;"Fund" means the Sierra Leone Deposit Protection Fund established under this Act;"Governor" means the Governor of the Central Bank;"Initial premium" means a fixed amount payable by a member bank or specialized deposit-taking institutions for the establishment of the Fund as an initial capital provided for in this Act;"insured institution" means a deposit taking financial institution licensed by the Central Bank;"insurance event" means an event that requires the Fund to undertake payment of insured deposits;"joint deposit" means the deposit held by two or more persons jointly, the payment of which may be demanded by all or any of the joint beneficiaries in accordance with the mandate of the holders of that account;"least cost test" means the calculation of the least costly resolution alternative for the Fund for payment of depositors of a failed bank or specialized deposit-taking institutions;"member institution" means an institution, licensed by the Central Bank that accepts deposits from the general public;"Minister" means the minister responsible for finance;"Ministry" means the ministry responsible for finance;"ongoing premium" means the sum payable by the member banks or specialized deposit-taking institutions;"person" means any natural or legal person;"premium" means the sum payable by the member banks or specialized deposit-taking Institutions;"purchase and assumption" means a merger or acquisition by another insured institution or contract to have the deposit liabilities assumed by another insured institution;"reserve Fund" means the fund that is derived from a member institution's premium contributions, investment income and any other income or resources provided to the Fund."significant shareholder" means a person who holds directly or indirectly five percent or more of the total subscribed capital of a member bank or specialized deposit-taking institutions;"subrogation" means the claims of insured depositors and creditors paid by the Deposit Protection Fund who will be entitled to the amount realized from liquidation of the failed bank's assets;"systemic" means the risk of disruption in the financial system with the potential to have serious negative consequences for the financial system and the real economy.Part II – Establishment of the Deposit Protection Fund
2. Deposit Protection Fund
3. Public policy objectives
The Fund shall have the following public policy objectives—4. Functions of the Fund
5. Head office
The Fund shall have its head office in Freetown and may have branches in the district headquarter towns subject to the approval of the Governor.Part III – Exclusivity of the Deposit Protection Fund
6. Prohibition on establishment and management of scheme
Part IV – Administration
7. Appointment of officer to manage the Fund
8. Other staff
The Governor shall transfer certain employees of the Central Bank to the office of the FundPart V – Capital, funding premiums and use of funds
9. Capital
10. Funding
11. Fund to manage funds
The Fund shall manage the Reserve Fund and the Abandoned Deposit Fund.12. Reserve fund Deposit Fund
13. Abandoned Deposit Fund
14. Resources of the Fund
15. Reserve target fund
16. Emergency funding
17. Premiums
18. Use of Fund
19. Establishment and maintenance of bank account
20. Operating expenditure
Part VI – Notice of administrative sanctions, cessation of membership and merger of member institutions
21. Administrative sanctions
22. Cessation of membership
23. Merger or amalgamation
Upon merger or amalgamation of a member bank with any other bank or specialized deposit-taking institutions—Part VII – Deposit protection scheme
24. Membership of the Fund
25. Insurable event and payment of insured deposit
An insurance event shall occur on the date where the Central Bank announces the revocation of a business licence of a failed bank or specialized deposit taking institution and the Fund undertakes to pay the insured deposits.26. Coverage
27. Right of offset
Where a depositor has obligations with the bank or specialized deposit-taking institutions the following shall apply—Part VIII – Monitoring of insured institutions
28. Power to collect information
Part IX – Rights and obligations of insured institutions
29. Rights and obligations
Part X – Payment of insured deposits
30. Payment of insured
Part XI – Financial statements, audits and annual report
31. Financial year
32. Financial accounts and audit
33. Annual report
Part XII – Miscellaneous provisions
34. Advertisement
An insured institution shall not advertise its insured status unless it obtains approval from the Fund.35. Public awareness
A member institution shall inform the public about its membership in the Fund.36. Tax exemption
The Fund shall be exempted from paying income tax and dividend.37. Immunity
38. Disclosure and transparency
39. Cooperation
The Fund and its supervisory department shall work together in relation to the following—40. Regulations
The Minister in consultation with its supervisory departments may by statutory instruments make regulations for giving effect to the provisions of this Act.41. Commencement of Act
The Act shall come into effect not later than 18 months of its enactment.History of this document
19 January 2023 this version
Commenced
12 January 2023
Assented to