Insured deposits

The Insurance Scheme for Personal Bank Deposits in the Russian Federation has been invoked to ensure the rights and legal interests of depositors with Russian banks are protected, to strengthen trust in the banking system and stimulate public savings in the banking system.

The creation and operation of the scheme is regulated by the Federal Law "On the insurance of personal deposits in banks of the Russian Federation" ¹ 177-FZ of 23.12.2003.

The Bank of Moscow has taken all statutory preparatory measures for entering the bank deposit insurance scheme and was one of the first of the large banks to submit an application to the Central Bank of the Russian Federation.

On 26th October 2004 the Bank Supervision Committee of the Bank of Russia handed down a positive report of compliance of the Bank of Moscow with the requirements for participation in the deposit insurance scheme.

On 28th October 2004 the state corporation, the Deposit Insurance Agency, included the Bank of Moscow under number 104 in the register of participant banks in the deposit insurance scheme.

Answers to questions most frequently asked about the Deposit Insurance Scheme pursuant to Federal Law ¹ 177-FZ of 23.12.2003 "On the insurance of personal deposits in banks of the Russian Federation"

1. Which deposits are insured?
   Funds in roubles and foreign currency placed with a bank as a deposit or in a bank account by private individuals. Exception is made for certain types of fund placements as set out in the Federal Law.


2. What funds held in a bank are uninsured?
   The following funds are not insured:
   1. funds held on the bank accounts of private individuals engaging in business activity without the creation of a legal entity, if these accounts are opened in connection with the aforementioned activity;
   2. funds held in bearer bank deposits, including those certified by savings certificate and (or) savings book payable on demand;
   3. funds transferred to banks under trust management;
   4. funds placed on deposit with branches of Russian banks located overseas.
   
   
3. From what time is the deposit considered insured?
   A bank deposit is considered insured from the day the bank is included in the register of participant banks in the deposit insurance scheme. This register is maintained, including the acceptance of banks onto the register, by the State Corporation, the Deposit Insurance Agency. The depositor does not need to take any action.


4. Is interest on a deposit insured?
   Interest sums on a deposit become insured if they are added to the principal deposit amount according to contractual conditions or Russian Federation legislation.
   

   According to current legislation from the time a bank’s licence to conduct banking operations is withdrawn the term for performing its obligations to depositors is considered to have become due (art. 20 of Federal Law of 02.12.1990 N 395-1 "On banks and banking activity"). Thus, all interest accrued on a deposit (calculated to the day preceding the day on which the licence was withdrawn) is added to the principal deposited amount and included in the insurance reimbursement calculation.

   For example, on 01.07.2006 a depositor placed the amount of 50 000 roubles on deposit for one year with a quarterly interest payment at the rate of 10% per annum being added to the principal deposit account. No funds were withdrawn from the account. Then, with the onset of an insurance event on 01.11.2006 the bank’s obligations included in the calculation of insurance indemnity amounted to 51 695.64 roubles, including: 50 000.00 roubles as the principal deposit amount; 1260.27 roubles as interest calculated for the full quarter; 435.36 roubles as interest for the incomplete quarter to the day preceding the day the licence was withdrawn.

5. When does the depositor become entitled to receive reimbursement of deposits?
   The depositor’s right to receive reimbursement of deposits arises in two cases:
   1. in the event of the Bank of Russia licence to conduct banking operations being withdrawn from the bank (revoked);
   2. on the introduction by the Bank of Russia of a moratorium on satisfying the claims of the bank’s creditors. These events are called insurance events.
   
   
6. What amount of insurance reimbursement can be obtained from a single bank?
   For banks in which an insurance event occurred after 1st October 2008 the maximum amount of indemnification on deposits is 700 thousand roubles. We would point out that when calculating the amount of insurance indemnification the sums of the bank’s counterclaims against the depositor are deducted from the total amount of deposits. For example, if the remaining balance of deposit accounts is 500 000 roubles, but the debt on a credit card is 200 000 roubles, then the insurance reimbursement is calculated using the following equation:
   500 000 - 200 000 = 300 000 (roubles):
   If the amount of deposits held in the bank exceeds the sum of insurance indemnification then the remaining part of the deposits will first be recovered under the bank’s liquidation procedures. For insurance events occurring in the period from 25th March 2007 to 1st October 2008 the maximum amount of insurance indemnity is 400 thousand roubles, from 9th August 2006 to 25th March 2007 the maximum amount of insurance indemnity is 190 thousand roubles, and for insurance events occurring prior to 9th August 2006 it is 100 thousand roubles.
   
7. What amount does the depositor receive if he has deposits held by different branches of the same bank?
   Deposits held at different branches of the same bank are deposits held in a single bank. Therefore, the general rule for calculating the indemnity amount for deposits is applied to them: 100 percent of the sum of all deposits held at the bank, not exceeding 700 thousand roubles.


8. What amount of reimbursement will a husband and wife receive if each of them has deposits held at the same bank?
   With the onset of an insurance event each spouse will independently receive 100-percent reimbursement of deposits held at the bank, not exceeding 700 thousand roubles.


9. I have a bank card attached to my husband’s account. How is deposit indemnification calculated in this case?
   Your spouse has granted you the right to dispose of funds held on an account opened under his name in a bank. Therefore, reimbursement of deposits will be paid only to the account holder, i.e. to your husband.


10. How is the amount of deposit indemnification calculated if a single depositor has a number of different deposits held at the same bank?
    In this case the sum of all the deposits is used for the purpose of calculating insurance indemnification, irrespective of the type of deposit or the currency it is held in. If the sum of all deposits held at the bank exceeds 700 000 roubles, reimbursement will be paid for each deposit proportionate to its size.

    For example, if a depositor has 2 deposits held at a bank with balances of 500 000 roubles and 900 000 roubles, the insurance reimbursement will be paid up to a maximum of 700 000 roubles: 250 000 roubles for the first deposit and 450 000 roubles for the second deposit.

11. What reimbursement will a depositor receive on deposits if he has a number of deposits held at different banks which have had their banking licence withdrawn?
    Insurance reimbursement is calculated and paid separately for each bank. Let us suppose that an insurance event has occurred at the banks where the depositor is holding deposits. Reimbursement will be paid for each bank according to a single rule: 100 percent of deposit amounts held at the bank, not exceeding 700 thousand roubles.
12. How is the reimbursement for deposits calculated if they are held in a foreign currency?
    If a deposit is held in a foreign currency, the reimbursement amount for deposits is calculated in roubles according to the exchange rate current at the Bank of Russia on the day of the onset of the insurance event.
13. In what currency is the reimbursement payment made?
    Reimbursement of deposits is paid in roubles.
14. In what form is reimbursement of deposits paid?
    Reimbursement of deposits is paid according to the depositor’s choice: either in cash or by electronic transfer of funds to a bank account nominated by the depositor.
15. How will debt incurred by credit provided by the bank affect the amount of reimbursement paid for deposits?
    According to the general rule the amount of reimbursement paid for deposits is determined on the basis of the difference between the sum of the bank’s obligations to depositors and the sum of counterclaims the bank has against the depositor which have arisen prior to the day the insurance event occurred. Counterclaims are understood to be any monetary obligations the depositor has to the bank on the basis of civil-legal transactions and (or) other grounds provided under federal legislation. The most common counterclaims a bank has against a depositor are credit demands.

    In this case, residual debt from credit, interest payable up to the day the insurance event occurred, and also penalty payments for late repayment of debt are deducted from the amount of deposits when calculating insurance indemnification.

    Example. On the day of an insurance event (10.11.2008) the total balance of the depositor’s deposit accounts was 200 000 roubles. Prior to this (01.07.2008) the depositor was issued a personal loan for 12 months amounting to 44 317.25 roubles with a 15% annual interest rate, to be repaid in equal monthly instalments. This credit was serviced without overpayment or late payment. The insurance reimbursement was calculated. The monthly instalment amount in repayment of the loan capital and interest is exactly 4 000 roubles. By the day the insurance event occurred the borrower had made 4 payments to the bank totalling 16 000 roubles (in repayment of 14 044.75 of the loan capital and 1 955.25 in interest). The remaining debt of the depositor under the principal loan amounted to 30 272.50 roubles. The depositor also has a debt to the bank for interest accrued from the end of the last interest period (month) up to the day the insurance event occurred. In our example this interest debt for 9 days amounts to 111.97 roubles.

    Insurance reimbursement is determined on the basis of the difference between the bank’s obligations to the depositor and the sum of the bank’s counterclaims against the depositor, and amounts to:
    200 000.00-30 272.50-111.97 = 169 615.53 (roubles)

16. Whom should a depositor approach to receive reimbursement of deposits?
    Within seven days of receiving the accounting ledger from the bank, in relation to which an insurance event has occurred, the Deposit Insurance Agency will publish a special announcement in the press and post it at the bank (a bank, in relation to which an insurance event has occurred, is obligated to provide the Agency with an accounting ledger within seven days of its onset). The announcement will state the places the depositor is to approach with an application to obtain the insurance. Generally, these will be banks operating in the area. If for some reason you are unable to reach a bank, the application can be sent by post in the manner stated in the announcement. You can also receive payment by post.
17. What is an agent bank?
    For the convenience of depositors and in accordance with the law, the Agency can accept depositors’ applications and pay them reimbursement of deposits via an agent bank acting on its behalf.
18. When does the period start and end, during which the depositor is entitled to demand payment of reimbursement of deposits?
    A depositor is entitled to apply to receive insurance from the day of the onset of the insurance event to the final day of bankruptcy procedures of the bank, and in the case of the Bank of Russia introducing a moratorium on satisfying the claims of the bank’s creditors, this will be up to the final day the moratorium is in effect (see also the next question).
19. What should I do if I have missed the deadline for submitting an application for the payment of insurance?
    In the event of missing the deadline for a depositor’s application, this can be reinstated by decision of the management of the Agency. However, this can only be reinstated under the circumstances set out in the Federal Law (for example, long-term illness, business travel).
20. What documents should the depositor submit to obtain reimbursement of deposits?
    The procedure for receiving insurance is very simple. You only need to complete a special application form and also take with you the identity document used to open the bank deposit (account).

    If you are acting through a representative, then he should have a notarised letter of authority confirming his right to demand payment of reimbursement for deposits on your behalf.

21. How does the payment process take place?
    You should take the application for insurance payment to the payment point stated in the Deposit Insurance Agency announcement. Your application will be received by them and you will be provided with information on the amount of deposits included under your name in the bank’s accounts records, and also you will be told the amount of insurance paid to be paid. If you agree with this, then you can generally receive the money the same day. If you disagree with the information contained in the accounting ledger you should provide additional documents substantiating your position.
22. What should a depositor do if he does not agree with the amount of reimbursement paid for deposits?
    When an application is made by a depositor to receive insurance he will be given an excerpt from an accounting ledger of the bank’s obligations to depositors, stating the amount of reimbursement of his deposits.

    In the event of the depositor disagreeing with the amount of reimbursement of deposits, it is suggested that the depositor submit additional documents to the Agency confirming the validity of his demands. They will be sent to the bank, which is obligated to send a notice of the results of their review to the Agency within 10 days of receipt of the documents.

23. How long will it take for the Agency to pay the depositor reimbursement of deposits?
    The amount of insurance agreed with the depositor will be paid by the Agency within 3 days of the depositor submitting the necessary documents to the Agency, but no earlier than 14 days from the day of the onset of the insurance event.
24. What liability does the Agency bear for non-payment of reimbursement of deposits within the prescribed deadline?
    In the event of non-payment of agreed reimbursement of deposits within the prescribed deadline being due to the fault of the Agency, the depositor will be paid interest on the amount of the non-payment at the Bank of Russia refinancing rate.
25. How can the depositor find out the time, place, form and procedure for receiving applications for the payment of reimbursement of deposits?
    The Agency’s announcement of the time, place, form and procedure for receiving applications from depositors will be printed in widely circulated printed press in the area of the bank. Such an announcement should be sent by the Agency for publication within seven days of receipt from the bank of the accounting ledger of obligations to depositors. The Agency will also send a notice by personal letter to each depositor within one month of receipt of such an accounting ledger from the bank.
26. What will happen to the remaining amount that exceeds the reimbursement of deposits received from the Agency?
    A depositor who has received reimbursement of deposits from the Agency retains to right to receive from the bank any remaining part of the deposit under current legislation. For example, through the receivership process when the bank is declared bankrupt.
27. Where can I have a detailed consultation in matters of deposit insurance?
    Comprehensive information on the Deposit Insurance Scheme (DIS) can be provided by specialists on the Deposit Insurance Agency’s hotline 8-tone-800-200-08-05 (calls free within the RF).
28. Are the depositor’s inheritors, who have received an inheritance after the onset of an insurance event, entitled to receive reimbursement of deposits?
    Inheritors who are private individuals and who have inherited the right to claim the depositor’s deposit(s) are entitled to receive reimbursement of such deposits if the aforementioned reimbursement has not been paid previously to the depositor. In order to obtain insurance reimbursement, the depositor’s inheritor should also submit documents verifying the inheritance right to the Agency in addition to the application for the payment of reimbursement for deposits and a document verifying his identification.

Postal address:: 109240, Moscow, Verkhniy Taganskiy tupik, building 4
e-mail: info@asv.org.ru
Website address: http://www.asv.org.ru/
Telephone hotline (calls free in Russia):
8-800-200-08-05