PORT OF SPAIN, Trinidad – The Trinidad and Tobago government Wednesday said it has published two orders that allows for the increase in deposit insurance coverage to be simultaneously matched by a prudent adjustment to the deposit insurance premium.
Finance Minister Colm ImbertFinance Minister Colm Imbert said that he signed both the Central Bank (Deposit Insurance) Order, 2024 and the Central Bank (Deposit Insurance Coverage Limited) Order, 2024, which were both published on August 29, 2024.
“Significantly, both Orders will take legal effect on October 1, 2024 and are based on careful consideration of funding reviews and assessments, international best practice and consultations with the Central Bank of Trinidad and Tobago and financial sector stakeholders,” Imbert said, adding “this adjustment is considered to be in the public interest and is intended to provide a further level of protection for persons who deposit their savings in financial institutions”.
Imbert said that Central Bank (Deposit Insurance Coverage Limited) Order, 2024 increases deposit insurance coverage from TT $125,000 to TT$200,000.
He said that the increase in coverage will benefit all depositors and aid to align coverage levels with the International Monetary Fund’s (IMF) recommended ratios for coverage of 1-2 times gross domestic product (GDP) per capita.
“The existing coverage limit, as a ratio of GDP per capita, equates to 0.89. Therefore, an increase in the coverage limit to TT $200,000, will increase the ratio to 1.42,” he said.
Imbert said that the Order will also compensate for inflationary pressures, which have cumulatively impacted the real purchasing power of depositors.
“Notably, the Retail Price Index was impacted by 49 per cent over the period 2015 to 2022, resulting in a deficit of TT$61,250 per maximum eligible covered deposit at the sustained coverage level,” Imbert said, adding the Order would maintain and surpass alignment with best practice, that is, the International Association of Deposit Insurers’ recommended coverage ratios of 90-95 per cent for the number of accounts and 20-30 per cent on the value of accounts
Imbert said that the change in coverage level increases protection from 94 to 96 per cent on all eligible number of deposit accounts and increases the aggregate value of insured deposits from 23 to 33 per cent held at licensed financial institutions.
Imbert said that the Central Bank (Deposit Insurance) Order, 2024, increases the premium levied on financial institutions from 0.2 to 0.3 per cent over a two-year period, with the first increase taking effect from October 1, 2024, that is from 0.2 per cent to 0.25 per cent and the subsequent increase from 0.25 per cent to 0.3 per cent taking effect from October 1, 2025.
“The cumulative effect of both Orders is that the increase in deposit insurance coverage will be simultaneously matched by a prudent adjustment to the deposit insurance premium levied in order to ensure the sustainability and effectiveness of the deposit insurance Fund,” Imbert said, adding that it is also intended to adequately fund the deposit insurance reserves and strengthen the resilience of the Fund against potential risks and uncertainties.
Imbert said given that the increase in premium levied from 0.2 to 0.3 per cent will be introduced via a phased approach over a two-year period, “there will be adequate provision for financial sector stakeholders to adjust”.
