Let’s say you have R100,000 in a South African bank… Then something catastrophic happens… A serious credit or liquidity event impacts the bank where your money’s located. That triggers the bank’s collapse. Worried, you try to withdraw your money… Only for the bank to say, “we don’t have it”. Now, you’ve lost R100,000 in an instant. That’s where CODI can help.

What can CODI do?

Well, in the past, you’d be extremely lucky to get any money back.

Fortunately, that’s all changed now thanks to “CODI”…

SARB launches “Depositor Insurance Fund”

On 25 April 2024, the South African Reserve Bank (SARB) officially launched the Corporation for Deposit Insurance (CODI).

As a new subsidiary under SARB, CODI will safeguard SA depositors.

It will do this by providing cover of up to R100,000 to each qualifying depositor, per bank, in the unlikely event of a bank’s collapse. This includes commercial, mutual banks, as well as local branches of foreign banks.

And there’s protection for pretty much all banking products including…

• Savings and current accounts
• Transactional accounts
• Term and notice accounts
• Islamic Wadi’ah, Qard and Murabaha products
• Tax-free savings accounts.

In simple term, it means if you have R100,000 in a bank and it collapses, you’ll receive your money back!

According to SARB, this coverage limit fully protects 9 out of 10 qualifying depositors in the country. This will bring relief for millions of South Africans who worry about another VBS type scandal that could wipe out their savings.

CODI Depositor insurance is great news for a couple of reasons…

Before CODI, if a bank collapsed and depositors couldn’t withdraw their money, government could use taxpayers’ money to compensate affected depositors on a case-by-case basis.

CODI will also maintain and administer the “Deposit Insurance Fund”. The fund is supported by monthly premiums and loan contributions by member banks, which will reduce the financial burden on taxpayers.

The cover is automatic, and you don’t have to register for CODI’s protection.

Secondly, it means you can deposit R100,000 in a bank with the best interest rates. More so, you can deposit R100,000 with multiple banks. And it’s “risk-free” as you won’t lose your money in the event of a bank collapse.

Currently, Tyme Bank offers 10% per year, which is the best fixed-deposit account. Sasfin’s deposit account annual rate is also attractive at around 9.92%.

The beauty is you now have the flexibility to choose the most attractive saving rate or rates, without the risk of losing your money.

PS. Looking for the best income investments, then make sure you read the latest issue of Real Wealth. In our latest issue we tell readers about a guaranteed return investment paying 11.5% return per year! Get a trial copy here.

 

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