Deposit insurance in the Russian Federation is a special mechanism for protecting citizens' funds. The main idea of the system is to ensure quick payments from an independent source of finance (for example, a special fund) upon termination of the organization in which the savings were located. Let us consider in more detail how mandatory deposit insurance is carried out.
System benefits
As the experience of most economically developed countries shows, deposit insurance in banks acts as an effective tool for solving a complex of macroeconomic and social problems. First of all, the system of guaranteeing savings helps prevent panic among citizens. This, in turn, ensures the stable operation of the banking system. Along with this, CERs help to reduce public costs in response to the crisis. Deposit insurance of individuals, among other things, increases public confidence in financial and credit organizations. This creates the preconditions for a long-term increase in private deposits. Today, government deposit insurance exists in 104 countries around the world.
Personal Deposit Insurance in Russia
It is carried out in accordance with the relevant Federal Law. The Law "On Deposit Insurance" was adopted in 2003, December 23. Its provisions determine the effect of CERs and the procedure for ensuring guarantees. In particular, in accordance with the Federal Law, all citizens' savings placed on accounts provided by banks registered in Russia are subject to protection. Individual deposit insurance also extends to funds on cards (except credit), as they also act as regular accounts. Savings are protected by virtue of the specified Federal Law. This means that there is no need to additionally conclude a guarantee agreement. In Russia, DIA - Deposit Insurance Agency operates. This corporation was formed in 2004, in January. The Deposit Insurance Agency monitors and manages the system. In Russia, participation in CERs is an integral part of the activities of organizations involved in attracting and storing citizens' savings. To date, the insurance system includes more than 800 banks.
Compensation amount
Compensation for deposits in the organization in respect of which the insured event took place is carried out in 100% of the amount of funds stored, but not more than 1,400,000 rubles. Savings held in accounts in foreign currencies are translated at the rate at the time the event occurred. The maximum amount of compensation - 1.4 million rubles - is accrued on deposits stored in one bank on different accounts (or one). Savings held in different financial institutions are provided independently of each other.
Important point
After the insurance indemnity is paid, the right of the depositor to claim for amounts exceeding the amount of guarantees is satisfied in the process of bankruptcy proceedings of first- rate creditors. Rights of claim for the amount of compensation paid go to the DIA. If a depositor was granted a loan at a bank in respect of which an insured event arose, the amount of compensation is reduced by the amount of the counterclaims of the financial and credit institution as of the date of termination of its activities.
Compensation Cases
The Law establishes the following circumstances in which compensation is paid to depositors:
- Cancellation (revocation) of a license.
- Introduction of a moratorium by the Bank of Russia on financial transactions.
Compensation payments start within three business days from the moment documents are submitted to the DIA, but not earlier than two weeks from the moment of occurrence of any of the above circumstances. Compensation for deposits is carried out either at the Agency’s office (in case the total amount and number of depositors are small), or in one or several authorized departments, or by mail. For each individual situation, a specific procedure for providing compensation is established.
Exceptions
Not subject to insurance:
- Funds in the accounts of notaries and lawyers, if they are open for the performance of professional activities provided for in the Federal Law.
- Bearer deposits.
- Money transfers without opening an account.
- Deposits in foreign divisions of domestic banks.
- Funds on metal depersonalized accounts.
- Savings transferred to a banking organization in trust.
- Money intended for settlement only using electronic means of making payments without opening an account with a financial credit company.
Financial background
Individual deposit insurance is supported by an independent fund. Its size on May 7, 2014 amounted to 195.7 billion rubles. (minus the created reserve for payment of indemnities in cases of occurrence - 157.6 billion rubles.). The main financial sources for the formation of the Fund are the state property contribution - 7.9 billion rubles, as well as insurance bank contributions and investment income from its funds. Contributions are the same for all financial institutions and must be paid quarterly. The tariff is determined by the board of directors of the DIA. At the moment, the rate is 0.1% of the average insured savings of individuals for the corresponding quarter.
Historical facts
From the moment when insurance of deposits of individuals began to operate, the amount of compensation increased by 14 times. At the initial stage, it amounted to 100 thousand rubles. Since August 2006, payments increased to 190,000 rubles, from March 2007 to 400,000, and from October 2008 to 700,000 rubles. In 2014, the State Duma adopted an amendment according to which the maximum amount of compensation became 1.4 million rubles. During the entire period of existence of CERs, more than 180 insured events occurred.
Amendment Details
A double increase in the amount of compensation was due to panic among depositors. According to bankers, this step of the State Duma is very positive, but it is unlikely to be able to contribute to the influx of deposits. The Financial Markets Committee decided to support this project. The meeting was held in an unconventional mode and was hidden from journalists. As the head of the Committee Burykina noted, the amendments at that time were incomplete, and in order to avoid discrepancies, the discussion should subsequently be held without representatives of the media.
Meeting agenda
The committee was to consider two bills. The first concerned doubling the insurance payment, and the second - the formation of an inter-factional group of deputies, which would engage in stabilizing the situation in the Russian financial market. However, the discussion touched upon a number of other topical issues.
Reasons for increased reimbursement
The need for urgent adoption of such a measure was due to a significant outflow of funds from citizens from ruble accounts. So, since the beginning of 2014, it amounted to about 216 billion rubles. In connection with the financial crisis that began in December, the risk of outflow increased significantly. Bankers point to the mass desire of Russians to transfer their funds to foreign currency accounts, as well as invest in property. According to Aksakov, president of the Russia Association, an increase in the size of insurance will contribute to the influx of money into domestic financial companies. As evidence of his position, he cites the situation in 2008. At that time, there was an outflow of deposits, amounting to 7%. After increasing the amount of insurance to 700 thousand rubles. the volume of deposits of citizens increased in October by 10%.
DIA work in new conditions
With the adoption of the amendment to increase insurance compensation, as noted by Aksakov, the system of contributions to the fund is unlikely to undergo any changes. With a significant decrease in the DIA reserve, it can apply for a loan from the Central Bank. This feature is provided for by the Federal Law on CERs. As noted by Isaev (agency chief), the decision will affect the work of the corporation, but the need to contact the Central Bank has not yet arisen.
Additional opportunities for citizens
As mentioned above, bankers consider the increase in insurance payments to be a very positive decision. At present, the average amount of deposits of the population is 500 thousand rubles. This relatively small figure is due to the fact that many have split up their funds and opened accounts in various financial institutions to reduce risks. With an increase in insurance payments, depositors are able to accumulate large amounts in one bank. Along with this, an increase in compensation acts as an additional guarantee of the Government. This, in turn, among other things also helps to increase confidence in the domestic financial sector. At the same time, according to bankers, the adoption of the amendment will lower the rate of revocation and selection of licenses in order to avoid increasing the burden on the insurance fund.