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Understanding deposit insurance

KDIF insures all deposits of individuals

Deposit Insurance System in Kazakhstan

Understanding deposit insurance
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Understanding deposit insurance

 
  • Deposit insurance system in Kazakhstan

    In 1999, during the 1st Congress of financiers of Kazakhstan, President Nursultan Nazarbayev set forth the initiative that deposit insurance system was to be established in Kazakhstan

    The basic objective of the mandatory deposit insurance system is to maintain stability of the financial system in the Republic of Kazakhstan, including strengthening public confidence in the Kazakhstani banking system via reimbursing depositors in the event of a deposit insurance system member bank failure

    The terms and conditions with regard to deposit insurance are set forth by Deposit Insurance Law of the Republic of Kazakhstan and the Banking Law of the Republic of Kazakhstan

  • Legal status of KDIF

    Kazakhstan Deposit Insurance Fund was established in 1999 to put into practice insurance of bank deposits of general public in the Republic of Kazakhstan. The Sole Shareholder and the founding organization of KDIF is National (Central) Bank of the Republic of Kazakhstan. The core mission of KDIF is to foster financial stability and ensure protection of rights and lawful interests of the second-tier banks’ depositors.

    Kazakhstan Deposit Insurance Fund shall reimburse depositors within the deposit insurance coverage limits in the event of a deposit insurance system member bank failure

    Deposit insurance coverage extends to deposits in national and foreign currency. Please further explore www.kdif.kz website to learn more

  • What retail deposits are subject to insurance?

    Deposit insurance coverage shall extend to money of private individuals notwithstanding their citizenship, including individual entrepreneurs without establishing a legal entity, placed with bank deposits and savings accounts in national and foreign currency, including:

    • Term deposits, call deposits, contingency deposits
    • Bank accounts, bank cards

    In the event of a DIS member bank’s forced liquidation, the depositor being the owner of bank account or savings account will be reimbursed within the deposit insurance coverage limit

  • What is the maximum deposit insurance coverage limit applied to deposits in tenge and in foreign currency?

    According to the Law of the Republic of Kazakhstan "Regarding amendments and additions to several legislative acts of Kazakhstan on strengthening protection of property rights, providing guarantees for protecting contractual obligations and toughening liability for their violation”, the deposit insurance coverage limit applied to deposits in national currency increased from 5 million to 10 million tenge. The coverage limit for deposits in foreign currency was retained on the same level of 5 million tenge

    The deposit insurance coverage limit extended to any bank deposit or bank account of a single depositor in any single bank shall comprise:

    • For deposits and bank accounts in tenge: 10 million tenge
    • For deposits and bank accounts in any foreign currency: 5 million tenge

    (in equivalent, at the exchange rate as of the date of enactment of the court resolution governing forced liquidation of deposit insurance system member bank)

    In case if a depositor holds several bank deposits subject to deposit insurance which are various by type and currency with one bank, then the total deposit insurance coverage limit shall not exceed 10 million tenge

    In case if a total of bank savings of a depositor exceeds 10 million tenge (total of deposits in tenge only) or 5 million tenge (total of foreign currency deposits only), then KDIF shall have the obligation to reimburse the depositor within the deposit insurance coverage limit. After the depositor’s claim towards KDIF has been settled, the balance over the deposit insurance coverage limit is attributed to obligations of the liquidation commission of the bank under liquidation. The claims towards the liquidation commission are settled according to the terms and conditions as established by the effective legislation

  • What is deposit insurance coverage?

    Deposit insurance coverage is the amount of money payable by KDIF to any bank depositor in the event of bank failure. According to the Deposit Insurance Law of the Republic of Kazakhstan, the depositor is entitled to claim the deposit insurance coverage in the amount of bank deposit balance net of accrued interest

    If interest accrued on deposit is compound, i.e. accumulated on to the deposit balance according to the bank deposit agreement, then the total deposit balance is subject to insurance within the deposit insurance coverage limit.

    If a depositor holds a foreign currency deposit or bank account, then in case of bank failure KDIF shall reimburse the depositor in tenge at the exchange rate valid at the date of enactment of court resolution governing forced liquidation of the bank

  • What are deposit insurance system member banks?

    According to regulations of the Republic of Kazakhstan, any bank licensed by the National (Central) Bank of the Republic of Kazakhstan to accept deposits from general public, open and operate current and savings accounts, excluding Islamic banks, shall apply for membership in the deposit insurance system immediately. Therefore, any deposit placed with a deposit insurance system member bank is protected by KDIF

    The up-to-date list of the deposit insurance system member banks is available on the KDIF’s website www.kdif.kz at any time

  • What deposits are not protected by KDIF?

    Unallocated bullion accounts, money and precious items saved at vaults, and deposits placed with Islamic banks shall not be covered by KDIF

  • Shall deposits placed at various banks be covered on a stand-alone basis?

    Yes. Should a depositor open deposits in a number of deposit insurance system member banks, these deposits at each bank shall be covered on per depositor – per bank basis within the deposit insurance coverage limit

  • Shall accrued interest be covered?

    According to the banking laws and regulations, KDIF shall not cover accrued interest. This obligation shall be settled by the liquidation commission of the failed bank.

    According to legislation and the generally accepted banking practice, if the bank deposit agreement provides for compound interest, then the amount of compound interest shall be added to the deposit balance and, therefore, will become subject to deposit insurance coverage.

  • How can I count the deposit insurance coverage on my own?

    Case 1

    Depositor’s savings at Bank A are 400 000 tenge, while balance at payroll bank card maintained by the same bank is 50 000 tenge. Interest accrued on bank deposit is 10 000 tenge, no compound interest provided for according to the deposit agreement. Bank A undergoes bankruptcy; court resolution governing liquidation of bank becomes effective January 1.

    Within 14 working days from the date of enactment of court resolution governing forced liquidation of the bank, KDIF shall announce that Bank B is appointed as agent bank to process payouts to depositors. So, the depositor is required to file an application in writing to Bank B. Via Bank B, depositor will be reimbursed in the amount of 400 000 tenge + 50 000 tenge. Accrued interest in the amount of 10 000 tenge is subject to reimbursement by the failed bank’s liquidation commission.

    Case 2

    Depositor’s savings at Bank A comprise a total of 11 000 000 tenge, payroll card balance at the same bank is 50 000 tenge. Compound interest is provided for in the deposit agreement. Since the beginning of current month, amount of 90 000 has been accumulated as compound interest, another 10 000 tenge has been accrued. Bank A undergoes bankruptcy.

    To be reimbursed in the amount of 10 000 000 tenge, which is the deposit insurance coverage limit, the depositor shall file an application to the bank appointed by KDIF as the agent bank to process payouts to depositors.

    Compound interest in the amount of 90 000 tenge is added to the deposit balance, therefore the liquidation commission shall reimburse the depositor in the amount of 1 000 000 tenge + 50 000 tenge + 10 000 tenge interest, which has been accrued from the beginning of the month.

    Case 3

    Depositor holds two deposits in Bank A: 4 000 000 deposit in tenge, and foreign currency deposit in the amount of 7 000 000 tenge (in equivalent). At the same time, the depositor has a loan with the same bank. Total of obligations, including accrued interest, composes 1 000 000 tenge. Bank A undergoes bankruptcy. In this case, the amount of deposit insurance coverage is calculated as difference between the covered deposit balance and loan balance, limited to the deposit insurance coverage limit.

    In this particular case, setoff will be implemented to result in: 4 000 000 + 7 000 000 – 1 000 000 = 10 000 000. Later on, KDIF will appoint Bank B as the agent bank to process payouts to depositors. The Bank A depositors are entitled to file their request with the Bank B in writing to be reimbursed in the amount of 9 000 000 tenge*. The residual amount of 1 000 000 tenge will be reimbursed by the failed bank’s liquidation commission.

    * The deposit insurance coverage limit for foreign currency deposits is limited to 5 000 000 tenge (in equivalent)

    Case 4

    A depositor holds two deposits in Bank A: national currency deposit in the amount of 8 000 000 tenge, and foreign currency deposit in the amount of 3 000 000 tenge (in equivalent). At the same time, the depositor holds a loan at the same bank at the amount of 1 000 000 tenge (interest included). According to court resolution, Bank A is to undergo bankruptcy.

    The depositor’s loan obligations are subject to offset, thus KDIF coverage is calculated as the difference between the depositor’s claim against the bank and the loan obligations to the bank within the deposit insurance coverage limit.

    In this case, the claim against the Bank A will be subject to offset and will result in the amount of 10 000 000 tenge (8 000 000 + 3 000 000 – 1 000 000). As soon as KDIF has appointed Bank B as the agent bank to process payouts to depositors, the depositor has the right to be reimbursed in the amount of 10 000 000 tenge by filing claim to the agent bank

Reimbursing depositors
 
  • How are bank depositors are reimbursed?

    The agent bank shall accomplish processing depositor’s claim within 5 working days from the date of submission of all required documents affirming the depositor’s rights to claim reimbursement.

    After 6 month from the date of public announcement about the beginning of the reimbursement period, the depositors shall have the right to address their claims directly to KDIF.

  • How soon will depositors be reimbursed?
    Court resolution governing forced liquidation of a bank is enacted (from the date of effect of court resolution) 30 (calendar)
    days
    Start of payouts, the agent bank to process payouts is appointed (from the date of enactment of court resolution)
    Any depositor shall have the right to file an application to the nearest bank branch of the agent bank in his current city of residence
    14 working
    days
    The agent bank settles the depositor’s claim (starting the date of submission of all required documents affirming the depositor’s rights to claim reimbursement) 5 working
    days
    6 month after the official announcement about the beginning of the reimbursement period is made by KDIF, the depositors shall have the right to submit their claims directly to KDIF  
  • What are the available settlement options?

    The depositors may choose from among the following payment options:

    • To receive cash at the agent bank branch
    • To remit money to the depositor’s bank account
    • To open a deposit at the agent bank
  • What are the required documents?
    • Original identity document
    • Original bank account / bank deposit agreements and copies thereof
  • The requirements to the agent bank for processing payouts to depositors
    • Financial viability, good financial standing
    • No violation of prudential regulations
    • No interim measures or sanctions applied by the financial supervision authority
    • Extensive bank offices network throughout the country
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