Deposit Guarantee Company: We give the highest deposit compensation in the region for bankrupt banks
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Deposit Guarantee Company: We give the highest deposit compensation in the region for bankrupt banks
Admin Tue Feb 16, 2021 10:55 am
Deposit Guarantee Company: We give the highest deposit compensation in the region for bankrupt banks
16th February, 2021
16th February, 2021The Deposit Insurance Company announced, on Tuesday, its intention to join a global institution in early 2022 to enhance its banking potential
The company's executive director, Walid Eidi, said in an interview with "Al-Eqtisad News" that the company started the work of joining a global deposit insurance institution to strengthen its banking position. He added that the compensation granted by the company is the highest and fastest in the Arab region
Below is the text of the interview
First of all, would we like to get to know the deposit insurance company in general?
The idea of establishing the company began in 2008, when I was general manager of the banking department in the Central Bank of Iraq. this company
During that period, a working group was formed under my chairmanship that included representatives of government private banks to prepare a law for them, and in fact we prepared the law and it was discussed in the Iraqi Private Banks Association, then it was sent to the State Council for scrutiny and sent to the Council of Ministers, and the latter referred it to the House of Representatives in 2009 for legislation
The company’s draft law was neglected in the House of Representatives for a period of 6 years due to the general conditions that Iraq went through, and in 2015 we withdrew the draft law from the House of Representatives and the Council of Ministers approved it as a company’s regulation that contains 16 articles and carried No. 3 of 2016. After that period, a committee was formed to implement the company's system, consisting of the central bank as well as other bodies, and the team began its activities
* How much is the capital of the company?
The paid-up capital of the company is 100 billion dinars, the public sector contributes 48% to it, and the remainder is from the private sector
* What is the percentage deducted from deposits?
With regard to the issue of deduction, the company charges one dinar out of every 10,000 dinars from deposits subject to guarantee in accordance with the provisions of Article 2 of the company’s system, which is the lowest deduction rate at the Arab level, as some companies will deduct 7% annually
The company also grants the highest compensation rate in the region, estimated at 51% for deposits of less than 100 million dinars and 25% for deposits in excess of 100 million dinars
* How long does a company take to pay back secured deposits?
Compensation shall be made within 30 days from the date of a judicial decision issued by the Financial Services Court declaring a bank bankruptcy. Note that the compensation period in some countries ranges from 6 months to a year
Through a study conducted by the company, we came to the fact that we guarantee small depositors at a rate of approximately 80%, which is a very high percentage, compared to the global percentage that reaches 70% as a maximum. We built a database and information on public deposits. And now we are negotiating with technology companies to build a very sophisticated electronic system for the company, through which we can compensate customers within 30 days, as mentioned earlier
* Who does the company's board of directors consist of?
- The company’s board of directors includes seven members, two of whom represent the public sector, the rest are from the private sector banks and five reserve members from the private sector as well. They were selected in the company's general assembly meeting held on August 31, 2019
* During the last short period, what were the main activities of the company?
The company held 6 meetings of its board of directors. We began to receive the amounts related to insurance operations in the company's account in the Central Bank of Iraq. Work has also been made to invest in the company's capital in order to reap future profits and distribute them to the banks joining the company
* What is the nature of these investments?
Investments currently consist of investment deposits and fixed deposits in commercial and Islamic banks for a period of one year, with an interest ranging between 6-7%. These investments will achieve financial returns for the company, and the latter will distribute them to joint stock banks and other parties contributing to the company's capital
* What is the percentage of banks ’contributions to the company's capital?
The largest percentage in the company's capital is for the banking sector, as it is estimated at 85%. Governmental banks contributed 4.1 billion dinars, and the National Pension Authority contributed 15 billion dinars, in addition to the contribution of other bodies such as insurance companies and other institutions
* Why do not all banks join the company?
So far, the company has witnessed the accession of 61 banks, and as for the rest of the banks, it is working to complete some of the requirements necessary to join the company, especially since there are recent banks
Does the company have a role in enhancing public confidence in the banking sector?
Through the company's website and direct contacts, we seek to increase public confidence by responding to customer inquiries and publishing all information related to the company
* What are the privileges that the bank that joins the company gets?
One of the privileges that the bank obtains, it becomes able to write on its official documents issued by it that “our customers’ deposits are guaranteed by the Iraqi Deposit Insurance Company, ”which enhances public confidence in the bank
And when we joined the International Deposit Insurance Corporation ( AIDI ) in Switzerland, the latter has requirements, including that the bank that does not join the ranks of the company must write a sign on its branches and on its official books stating that the bank’s deposits are not guaranteed in the deposit insurance company. This will take place in Iraq after joining the Foundation
* Is there any intention by you to join the International Deposit Insurance Corporation?
We approached the company verbally to request joining through their office in Amman which is managed on their behalf by the Central Bank of Jordan, and membership fees were determined, which were estimated at 17 thousand euros in addition to other fees, and the matter is still taking place in its routine context as it requires us to submit a complete file on the company, including it. Final accounts as well as other requirements for the purpose of joining. We expect to join the foundation in early 2022
* What are the company's goals for the next stage?
The first goal is to focus on the media side to reach the target groups, and the other goal is to eliminate the phenomenon of hoarding money in homes, and also to increase the company's capital
* Last word ?
Let everyone be reassured, there is no losing deposit guarantee company in the world, because companies always take the necessary precautions to prevent bankruptcy, especially as they have the support of central banks in the countries in which they operate
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