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Extending the Deposit Insurance System

Date: 27.05.2020

After being adopted by the State Duma of the Russian Federation and approved by the Federation Council, Federal Law dated 25.05.2020 No. 163-FZ "Of Amending Certain Legal Acts of the Russian Federation intended to extend the guarantees provided by the statutory deposit insurance system was signed by the President of the Russian Federation V.V. Putin.

Since October 1, 2020, the adopted amendments extend the deposit Insurance systems coverage to accounts of certain categories of non-profit organizations and socially-oriented associations of individuals, and also provide for the right of citizens for increased deposit insurance coverage in case of temporary high account balance under specific life circumstances defined by the law.

The list of legal entities, whose funds are subject to deposit insurance coverage in compliance with the law, includes consumer cooperatives (except nonbank financial institutions), landowners partnerships (including homeowners associations, gardeners' and market-gardeners' non-profit partnerships), religious organizations, charity funds, organizations included in the public service provider registers. The maximum amount of coverage for such deposits is determined in RUB according to the same rules as apply to individuals and small businesses: 100% of all insured liabilities of the bank to such a depositor (less the amount of bank's counter claims to the depositor), but not more than RUB 1.4 million in total.

Besides, the dedicated coverage with the reimbursement limit up to RUB 10 million is provided for the special accounts designed to accumulate and use cash for major renovation of the common facilities of apartment buildings.

The individuals, who, at the time of an insured event, happen to have large amount on the account balance that is resulting from residential real estate sales, as well as inheritance, social benefits, subsidies, under enforcement of court decisions etc., will be able to receive the increased insurance payout. The insurance benefit limit up to RUB 10 million in total will apply to such deposits during 3 months since the date such funds are credited to the bank account.

The law also introduces other amendments that enhance efficiency of the deposit insurance system.

The adopted law has high social importance, serves the interests of people and socially-oriented organizations, and will contribute to building trust of people to the banking system.

By results of Q1 2020, the total amount of insured deposits of individuals reached RUB 31,370 billion, that of sole entrepreneurs RUB 732 billion, and that of small business enterprises RUB 3,369 billion. The current coverage limit of RUB 1.4 million fully covers 99.5% of deposits in terms of quantity and 54.4% in terms of account balance amount.

Throughout the existence of the mandatory deposit insurance system, the Agency has paid RUB 1.99 billion to 4.16 million depositors, including RUB 2.14 billion to 6.55 thousand small businesses.

In 291 insured events that occurred after the limit of RUB 1.4 million was enacted, 97% depositors received the deposit insurance payouts from the Agency covering full amount of their savings in the failed banks.

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