Azerbaijan drafts amendments to the law on deposit insurance
Azerbaijan, Baku, Feb. 22 / Trend A.Akhundov /
A draft law on amendments to the law on deposit insurance will soon be submitted to the Presidential Administration of Azerbaijan, executive director of the Azerbaijan Deposit Insurance Fund (ADIF) Azad Javadov told Trend.
"Discussions on the draft law by the board of trustees have been completed. In the near future the draft law will be submitted to the presidential administration," Javadov said.
According to him the key amendments are on the exclusion of the following three items from the list of deposits, not related to secure deposits within the law (compensated by the fund to secured depositor):
- Cash in bank accounts opened by individuals in connection with entrepreneurial activity;
- Deposit in the amount of the loan to the bank and its depository interest, regardless of whether the payment period has expired or not;
- Deposits held as collateral obligations to the bank.
"That is, if the law passes, these types of deposits will be insured by the fund," Javadov said.
Following deposits will still not be insured:
- Funds raised through placement of debt securities in bearer certificates deposit;
- Deposits attracted by branches opened by the bank outside the Republic of Azerbaijan;
- Deposits from suspicious transactions in connection with the legalisation of money or other property acquired as a result of illegal activity and terrorist financing, provided for by the legislation;
- Deposits, the occurrence of which as a result of illegal activity, is established by a court decision;
- Deposits that are subject to arrest;
- Deposits contributed with an annual interest rate exceeding the limit;
- Funds of individuals in the trusted management of the bank.
"Except for the point on exceeding the interest rate, the remaining six items are practiced throughout the world. Insurance of legal entities will gradually be added to the agenda in future," Javadov said.
The changes also aim for a reduction of the period of compensation (currently, the payment is made within 90 days).
"Following our first experience of compensation payments to depositors of the bankrupt Royal Bank, we realised that we can do it within 14 days. There is no need to wait 90 days," Javadov said.
ADIF began operations on August 13, 2007. Today, ADIF members comprise 42 banks out of 43 operating in the country.