Deposit Insurance Scheme Regulation

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Deposit Insurance Scheme Regulation

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Regulation Number: 163R2015/ Volume: 44 Number: 248 Date: 9 Zulqadah 1436 - 24 August 2015 Monday

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MALDIVES MONETARY AUTHORITY Malé, Maldives

DEPOSIT INSURANCE SCHEME REGULATION

Introduction and Numbering

1. (a) This regulation is drafted under Articles 62 and 66 of Law Number 24/2010 (Banking Act of Maldives). (b) This regulation shall be referred to as the [Deposit Insurance Scheme Regulation].

Commencement of Operation of Regulation

2. This regulation shall come into effect from 24 August 2015.

Deposit Insurance Scheme

3. The Authority shall establish a Deposit Insurance Scheme to ensure stability in the financial system of Maldives and to protect the rights of depositors.

Scope of Scheme

4. Every bank accepting deposits in Maldives shall participate in the Deposit Insurance Scheme.

Exemption from Membership in Deposit Insurance Scheme

5. (a) A bank may apply in writing to the Authority for exemption from membership in the Insurance Scheme under Article 4 of this regulation and the conditions specified therein. Upon receiving such application and the Authority obtaining further information and documents, the Authority may exempt the bank from membership in the Insurance Scheme after examining the matter. (b) The bank submitting the application under paragraph (a) of this article shall submit further information and documents to the Authority as requested. (c) The Authority shall decide on the application submitted under paragraph (a) of this article after examining the matter. (1) The bank submitting the application must be engaged in the business of accepting deposits in Maldives. (2) If the applicant is a foreign bank, the branch operating in Maldives must have its deposits insured under a Deposit Insurance Scheme or similar scheme outside Maldives, and the level of protection and assurance provided to depositors under such scheme must be assessed. (d) If a bank fails to comply with any condition or conditions specified by the Authority for exemption under paragraph (a) of this article, the Authority may revoke the exemption. The Authority may also revoke the exemption if it deems it necessary for the public interest.

Insured Deposits

6. (a) Deposits insured under the Scheme are deposits held in savings accounts, current accounts, fixed deposit accounts, and similar accounts opened at member banks under Islamic banking principles. The amount of insured deposit per depositor held at a member bank is 30,000 (Thirty Thousand) Rufiyaa or the equivalent amount in foreign currency. The following deposits are not included in the insured deposits under this article: (b) Various deposit liabilities held at member banks shall not be insured under the Scheme. (1) Deposits held at other member banks. (2) Deposits held by the Government of Maldives, including Ministries, Departments, Local Councils, and State Institutions. (3) Deposits held by directors, executives, officers, and parties related to the bank as determined by the Authority. (4) Deposits held in the name of another debtor to whom the bank is obligated.

Establishment and Management of Deposit Insurance Fund

7. (a) The Authority shall establish and manage a fund referred to as the [Deposit Insurance Fund] under the Deposit Insurance Scheme. (b) The Fund shall consist of the following currencies: (1) Initial payments made by member banks to the Fund under Article 9 of this regulation, premiums on insured deposits, fines, and other payments made by these banks under this regulation. (2) Interest, income, and other funds received from investing the funds in the Fund. (3) Funds returned to the Fund from the assets of failed member banks or proceeds from asset sales, up to the amount paid by the Fund for insured deposits at the failed bank. (4) Funds provided to the Fund by the Government or the Authority as loans or non-refundable grants. (5) Other funds received by the Fund with the approval of the Authority. (c) The Fund shall be used exclusively for the following purposes: (1) Paying funds to depositors as provided in this regulation. (2) Investing. (3) Covering expenses incurred in managing the Fund.

Investment of Funds in the Fund

8. The Authority may invest the funds in the Fund or any part thereof in various ways. (1) Investing in Government Securities of Maldives. (2) Investing in other assets or investments as determined by the Board of Directors of the Authority.

Initial Payments to be Made by Member Banks to the Fund

9. (a) Every member bank shall pay an amount equivalent to 0.50 (zero point five) percent of the total insured deposits held at that bank to the Deposit Insurance Fund, as determined by the Authority on a specific date. (b) For insured deposits held in foreign currency, the amount paid to the Fund by member banks under paragraph (a) of this article shall be in Rufiyaa equivalent to that deposit.

Annual Premium

10. (a) Every member bank shall pay an annual premium to the Deposit Insurance Fund in the form of funds at a rate determined by the Authority for various amounts. For insured deposits held in foreign currency, the amount paid to the Fund shall be in Rufiyaa equivalent to that deposit. (1) If the bank's Capital Adequacy Ratio is 15 (fifteen) percent or higher, the bank shall pay funds equivalent to 0.100 (zero point one zero zero) percent of the insured deposits held at that bank to the Fund. (2) If the bank's Capital Adequacy Ratio is lower than 15 (fifteen) percent, the bank shall pay funds equivalent to 0.125 (zero point one two five) percent of the insured deposits held at that bank to the Fund. (b) The Capital Adequacy Ratio referred to in paragraph (a) of this article is the ratio as of 31 December of the previous year. The insured deposits referred to in paragraph (a) of this article are based on deposits held as of 15 December of the previous year. Thus, the Capital Adequacy Ratio and insured deposits prepared shall be submitted to the Authority by the end of January each year, certified by the bank's external auditor and the bank's manager's signature, confirming they are accurate figures. (c) Every member bank shall pay the funds required under paragraph (a) of this article by the end of January each year, as determined by the Authority. (d) If any member bank fails to pay the annual premium by the deadline specified in paragraph (c) of this article, the bank may be fined. In such cases, an additional rate shall be charged daily on the unpaid funds, calculated as 200 (two hundred) basis points above the Treasury Bill rate, up to a maximum of 100,000 (One Hundred Thousand) Rufiyaa per day. The total amount determined in this manner shall not exceed 5% (five) percent of the bank's capital.

Payment of Funds to Depositors Insured

11. (a) Funds shall be paid to depositors insured under the Insurance Scheme, subject to the provisions of Law Number 24/2010 (Banking Act of Maldives), upon the revocation of the license of a member bank or the appointment of a receiver for a member bank. (b) If the license of a member bank is revoked or a receiver is appointed for a member bank, the Authority shall publish a notice in the Government Gazette. (c) Within 1 (one) month of the publication in the Government Gazette of the revocation of the license of a member bank or the appointment of a receiver, the Authority shall pay funds to depositors insured under the Scheme, in the amount determined by this regulation. (d) The amount of funds payable to depositors insured under the Insurance Scheme is the total amount of insured deposits held by the depositor in various accounts at the bank, plus any interest accrued on those deposits up to the date of license revocation or receiver appointment, minus any other funds the depositor is obligated to pay to the bank. The amount payable to a depositor shall not exceed 30,000 (Thirty Thousand) Rufiyaa. For Rufiyaa deposits and foreign currency deposits, the funds shall be paid in Rufiyaa. (e) The total amount of funds for all accounts of a depositor under paragraph (d) of this article shall be determined including funds in accounts opened in the name of the depositor's own business. For joint accounts opened with other parties, the depositor's share of the funds shall be determined equally among all parties after considering the bank's documents and other agreements. The amount allocated to the depositor shall be determined. (f) The funds paid to depositors at a member bank under the Insurance Scheme shall be accounted for in the bank's books as an annual premium payable to the Insurance Scheme. The bank shall deduct this amount from the funds payable to individual depositors.

Maintenance of Fund Accounts

12. (a) The Authority shall maintain the books, accounts, and records of the Fund in accordance with the principles of double-entry bookkeeping. (b) At the end of each calendar year, the Authority shall prepare an annual balance sheet, profit and loss accounts, and a cash flow statement for the Fund. An external auditor shall be appointed to audit these statements.

Submission of Information

13. To facilitate the implementation of this regulation, every bank shall submit further information, records, and reports to the Authority at further times and in further formats as determined by the Authority.

Interpretation

14. Unless otherwise specified in this regulation, various expressions and terms shall be interpreted as follows: [Authority] refers to the Maldives Monetary Authority established under Law Number 6/81 (Maldives Monetary Authority Act). [Scheme Member] or [Member Banks] refers to the members of the Deposit Insurance Scheme established under this regulation. [Bank] refers to a bank licensed by the Authority under Law Number 24/2010 (Banking Act of Maldives). [Scheme] or [Insurance Scheme] refers to the Deposit Insurance Scheme established under this regulation. [Fund] refers to the Deposit Insurance Fund established under this regulation.

Times for Sending Gazette Announcements, Notices, and Letters Free of Charge

2. Every day before 12:30 PM to 1:00 PM, and 3:30 PM to 4:00 PM - Tuesday and Thursday Friday - 11:00 AM to 11:30 AM, and 3:30 PM to 4:00 PM Saturday - 3:30 PM to 4:00 PM Every night of the week - 7:00 PM to 7:45 PM

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