South Africa Launches CODI: A Game-Changer for Bank Depositors in 2024

1. The Corporation for Deposit Insurance (CODI) is set to become fully operational by April 2024, enhancing South Africa’s financial safety net and supporting the South African Reserve Bank in maintaining financial stability.
2. CODI’s primary functions include building and managing the Deposit Insurance Fund (DIF) to protect depositors in case of bank failures and promoting public awareness of the deposit insurance scheme (DIS).
3. Once operational, CODI will cover qualifying depositors up to a maximum amount of R100,000 per bank, providing adequate protection to vulnerable depositors while ensuring the system remains cost-effective.

The Corporation for Deposit Insurance (CODI) is set to become fully operational by April 2024, marking a significant step forward in South Africa’s financial safety net. Established as a legal entity on March 24, 2023, CODI aims to support the South African Reserve Bank (SARB) in maintaining financial stability and protecting depositors from losing money when their banks fail.

In the coming year, CODI will focus on implementing governance structures, finalizing legislation, and developing a technology solution to automate the collection of depositor data. The primary functions of CODI include building and managing a Deposit Insurance Fund (DIF) to pay out depositors in case of bank failure and promoting public awareness of the deposit insurance scheme (DIS).

The establishment of CODI and the DIS follows lessons learned from the 2008-09 global financial crisis and local experiences, which led to the introduction of the “Twin Peaks” regulatory model to reform the financial sector. The Financial Sector Regulation Act 9 of 2017 (FSR Act) provided an explicit mandate for the SARB to maintain and enhance financial stability, with the Prudential Authority (PA) overseeing the safety and soundness of financial institutions.

The FSR Act was later amended to provide for the orderly resolution of designated institutions by the SARB and to establish CODI as South Africa’s DIS. These developments form part of the country’s financial safety net.

Once operational, CODI will cover qualifying depositors up to a maximum amount of R100,000 per bank. The coverage limit aims to provide adequate protection to vulnerable depositors while ensuring that the system remains cost-effective. A 2021 survey found that 95% of qualifying depositors would be fully covered at the R100,000 coverage level, with only 5% of depositors holding deposits above the limit being partially covered.

In the meantime, CODI will work closely with National Treasury to finalize deposit insurance secondary legislation, develop technology systems to automate data collection from banks, and establish governance and administrative processes to collect levies and premiums for the DIF.