The Reserve Bank of New Zealand (RBNZ) and Treasury today tweaked the bank deposit guarantee scheme, including introducing a fee to be paid by finance companies.

Finance Minister Michael Cullen on Sunday announced a $150 billion guarantee for retail bank deposits. The scheme was to be free for institutions with total retail deposits under $5b with a fee of 10 basis points per annum charged on total deposits above $5b.

Critics said finance companies get a free ride and also that the lack of a wholesale capital guarantee puts New Zealand banks at a disadvantage in international markets.

"As the retail deposit guarantee scheme is being implemented, a number of policy issues are arising that are being addressed," RBNZ governor Alan Bollard and acting secretary to Treasury Peter Bushnell said in a joint statement.

A fee of 300 basis points per annum will now be charged monthly to finance companies rated below BB or unrated.

A deed for non-bank deposit takers taking part in the scheme will limit potential to strip out funds through dividend payments or related party transactions. Non bank deposit takers will also face increased reporting requirements and the Crown can appoint an inspector. Personal undertakings will be required of directors.

As building societies and credit unions issue subordinated debt the deed with ensure deposits relating to them are covered.

Deposits in New Zealand branches of overseas banks placed by non-residents will be covered but with limits imposed.

New entrants who are either not in existence or not eligible on October 12 can enter the scheme but must have a BBB minus or better credit rating.

The scheme is an opt-in scheme and takes the form of a bilateral contractual agreement between the Crown and the individual institutions which take up the guarantee.

A bank with $20 billion in retail deposits would pay $15 million in fees per annum.