Kazakhstan Deposit Insurance Fund is a non-profit organization that guarantees deposits of individuals placed with second-tier banks of the Republic of Kazakhstan. The mission of KDIF is to maintain public confidence in, and stability of Kazakhstani financial system by insuring individual deposits and encouraging the member banks in the deposit insurance system to conduct operations with prudence and responsibility.
The governing laws and regulations are laws of the Republic of Kazakhstan “On banks and banking activity” (1993) and Law of the Republic of Kazakhstan “On mandatory insurance of deposits placed with the second-tier banks of the Republic of Kazakhstan” (2006).
KDIF was founded 15 November 1999. National Bank of the Republic of Kazakhstan is the founder and the sole shareholder.
Deposit Insurance System
In accordance with the Deposit Insurance Law of 2006, the deposit insurance system has the following features:
– Compulsory membership for banks which hold license for cash transactions and opening and maintenance of bank accounts of individuals,
– Mitigation of risks associated with operations,
– Accumulative basis of generation of the special reserve fund for payouts.
Mission, Mandate and Powers
Mission of KDIF is to maintain public confidence in Kazakhstani financial system and its stability as one of the financial safety net organizations by insuring deposits of individuals and encouraging member banks to conduct their operations with prudence and responsibility.
The strategic objectives are: – Sound corporate governance – Operational preparedness for bank failures – Enhanced public awareness of the National deposit insurance system – Continuing professional development opportunities for staff. The key functions of the Fund are: – to reimburse depositors in the event of forced liquidation of a member bank, – to maintain and publish a to-date register of member banks, – investment management, – to accumulate special reserve for payouts, – to select the agent bank for payouts, – to act as a party of temporary administration of a bank in conservatorship or in period of withdrawal of the licenses for banking operations, – to act as a party of liquidation commission and the creditor committee as long as the claim of the Fund has been unsettled, and other civil functions.
Scope of Coverage and Maximum Coverage Limit
In Kazakhstan, membership in deposit insurance system is compulsory for those banks which hold license for cash transactions and opening and maintenance of bank accounts of individuals (35 member banks of the total 38); according to the legislation as effective, the Fund does not guarantee deposits in Islamic banks. The scope of coverage are bank accounts of individuals and individual entrepreneurs of all types with resident banks in the Republic of Kazakhstan in any currency; maximum coverage limit is 5 million Kazakhstan tenge.
The Reimbursement Cases
There have been three major cases of bank failures and reimbursing depositors in Kazakhstan in 2002, 2005, and 2009. Two of the three banks – JSC “Nauryz Bank Kazakhstan” and JSC “Valut Tranzit Bank” are in the process of liquidation to date. Payouts to depositors of the banks has amounted to approximately 15 billion Kazakhstan tenge.
- Higher authority – the sole shareholder,
- Management authority – Board of Directors,
- Executive authority – Chairperson,
- Advisory authority – Advisory Council.
Since October, 2002, Ms. Bakhyt Mazhenova acts as Chair.
KDIF has maintained membership in the International Association of Deposit Insurers since 2003.
- ^Law of the Republic of Kazakhstan “On Compulsory Insurance of Deposits Placed with Second-Tier Banks of the Republic of Kazakhstan (2006), Art 3
- ^Law of the Republic of Kazakhstan “On Banks And Banking Activities” (1995), Art 61-1
- ^Law of the Republic of Kazakhstan “On Compulsory Insurance of Deposits Placed with Second-Tier Banks of the Republic of Kazakhstan (2006), Art 17-18
- ^Annual Report – 2012
Ofer Abarbanel is a 25 year securities lending broker and expert who has advised many Israeli regulators, among them the Israel Tax Authority, with respect to stock loans, repurchase agreements and credit derivatives. Founder of TBIL.co STATX Fund.