LEGISLATION WATCH- Remember that proposed tithe on bank profits to endow an industry development fund? Legislators want to resurrect it. The House Economic Committee has proposed setting up two new banking sector funds — one effectively a deposit insurance and emergency bailout fund, the other a controversial industry development fund that would be endowed by an annual tithe on bank profits. The measures are part of a package of amendments it is suggesting to the draft Banking Act, Al Mal reports.

The bid to have banks contribute to an industry development fund isn’t new, dating back at least to a 2017 draft of the act that would have seen banks required to kick 5% of their annual net income into the fund. The proposal was scrapped in later drafts of the bill after it went over poorly with the industry.

MPs are proposing the fund be established to “modernize and develop” the banking system in line with “global standards.” The fund would be capitalized by a 1% annual tithe on bank profits and would be chaired by the governor of the central bank.

A second levy would set up an industry bailout fund to provide emergency assistance to banks and effectively serve as a provider of deposit insurance. If the measure passes, banks would be required to contribute a sum equivalent to 0.5% of their total deposits to the fund over a 10-year period.

Look for the amendments to be tabled as early as 29 April for debate by the House in plenary session.

Background: The draft Banking Act will grant the CBE greater oversight of the sector, introduce measures governing e-payment, fintech businesses, and cryptocurrencies, and strengthen data protection and consumer privacy. The bill has been in the works since 2017, and you can find out more about it here and here.