Due to the difficult economic situation in the world, which led to a decrease in incomes of citizens, the number of delinquencies on loans from both individuals and legal entities has increased. For this reason, cases of bank bankruptcies have become more frequent. What the depositors should do in this situation and is there any chance to get their money back?
We hasten to reassure – clients of the bankrupt bank can get their savings by applying to the Agency for Deposit Insurance. The main thing is not to panic, to act calmly but without Etvhindu delay.
Who bears the losses in bankruptcy
The client has no means to prevent or influence the bankruptcy of a financial institution. He can only take preventive measures. For example, before signing a contract with a bank, it is necessary to check its rating on a special database.
When a bank goes bankrupt, losses are incurred:
- Depositors and customers who have accounts in this credit institution – first of all;
- All counterparties of the bank;
- Personnel who will be out of work;
- Bidders, if the bank is involved in the implementation of the procurement – the participants will not be able to provide a bid, to give a guarantee or warranty.
On the basis of how severe the consequences are after the bankruptcy of banks, to regulate this issue, a mechanism for the return of funds to depositors was introduced into the legislative framework.
For a consultation with a commercial law lawyer, contact Kirill Yurovskiy.
What does the law say
It is worth noting that the bankruptcy of financial companies is treated by the court more strictly than the insolvency of other enterprises. If the bank loses the ability to repay all claims of creditors, it is recognized as being on the verge of bankruptcy.
The law prescribes specific situations in which a credit enterprise can be said to be insolvent:
- The bank does not have the financial ability to fulfill its obligations to the lenders by selling its own property, because it is not enough.
- The financial institution has not performed operations for more than 2 weeks from the date of execution of payment orders.
This refers specifically to monetary obligations: monthly payments, employee salaries, severance payments, etc.
Peculiarities of bankruptcy of banks
There used to be a separate law on insolvency of credit institutions, but for the past few years this issue has been regulated by specially introduced chapters in the Law on quoteamaze Bankruptcy.
First and foremost, attempts are made to restore the normal operation of the bank. If they do not bring the expected result, the organization may have its license revoked. The Central Bank cancels the license in the following cases:
- The credit institution ignores or fails to comply with the Central Bank’s requirement to bring the amount of equity capital and the amount of authorized capital into compliance.
- The bank fails to satisfy the demands of creditors in the amount of 1000 fold of the minimum wage within 14 days after the due date.
- The amount of the organization’s funds is lower than the minimum amount of the authorized capital, which was fixed at the time of registration of the bank. The rule applies if more than 2 years have passed after the receipt of the license.
- The value of the bank’s equity capital adequacy ratios is less than 2%.
It is worth noting that before declaring bankruptcy, a credit institution takes all possible measures to prevent it:
- external management by a temporarily appointed administration;
- financial rehabilitation;
- reorganization of the bank.
Only in case none of the measures have any effect, a decision on declaring the bank insolvent is taken and the financial claims of creditors are satisfied. Claims of individuals under the contracts of accounts or bank deposits belong to the third order of satisfaction.
Deposit Insurance Agency
This state structure provides and supervises the deposit insurance system, in which more than 850 banks of the country participate. When one of these banks has its license revoked, its clients have the right to apply for reimbursement of their deposits. Such systems for the protection of private investments function in almost all countries.
The agency insures:
- funds on bank cards and accounts;
- deposits in national and foreign currencies;
- accounts of trustees and guardians where funds are kept for their wards;
- Individual accounts;
- Notional accounts opened for settlements under real estate contracts during its registration.
The Agency does not insure:
- bearer deposits;
- unspent credit card limit;
- electronic money;
- deposits entrusted to the credit institution for trust management;
- accounts with precious metals (gold, platinum, etc.);
- accounts that are held domestically, but were opened abroad;
- accounts opened for lawyers or notaries.
Within two weeks after the bankruptcy, the Agency selects an agent bank and gives it the authority to return deposits to customers. In addition, DIA must within 30 days notify in writing all affected people about the date and place of receipt of applications for compensation for deposits, as well as communicate the name of the agent-bank which will deal with these issues.
Debtors of “burst” banks should not wait for good news about debts write-off – their outstanding loans will be transferred to another financial institution at the discretion of the Agency.
Terms and maximum amount of payouts
Payments to depositors can be returned within 3 days after filing a relevant application, provided that two weeks passed after the bank bankruptcy was declared or the insured event occurred. Citizens can receive their money in different ways: in cash, by postal order, by transfer to an account at another bank.
If one client has several deposits and their amount exceeds the maximum amount for which insurance is provided, the funds will not be compensated in full. To avoid such situations, it is recommended to make deposits up to the insured amount or open accounts with several financial institutions at the same time.
How a depositor can get his money back
If a citizen cooperated with a reliable bank, which guarantees deposit insurance, then the money can be returned through the DIA. In addition to the deposits themselves, the Agency also returns the interest on them, which accrued before the day of the insured event.
If the depositor’s funds were kept in foreign currency, then they will certainly be transferred to the national currency at the current rate.
Actions of the citizen in case of bankruptcy of the bank:
- Provide the necessary documents to the designated agent bank or DIA (addresses will be specified in the notice).
- Write an application for refunding.
- In some cases you need to provide additional documents: notarized power of attorney (if the issue will be addressed by the depositor’s representative), certificate of inheritance (if the depositor’s heir wants to return the money), etc.
- Expect to receive payments (not earlier than 14 days after bankruptcy).
- If the bank was dishonest – it did not add the client to the register of depositors, you will need to provide evidence of the existence of the deposit (for example, an account statement, signed agreement, checks for receipt of funds through an ATM, etc.).
You can download a sample application on the Agency’s website or obtain it from the agent bank. To withdraw money from a deposit made in the name of the child, the parent or legal representative must enclose a birth certificate. All documents may be brought in person to the agent bank’s or ABC’s branch or mailed to you by registered mail with notary’s signature affixed thereto. If you miss the deadline for applying for the return of deposits, you should send a statement indicating a valid reason for the delay.
To protect yourself from trouble, you should invest money only in those banks that insure the financial means of their customers. As a rule, conscientious credit organizations put a mark “insured deposits” on the contracts or place an appropriate announcement directly on the doors of branches. In any case, it is better to double-check the data of the bank on the official website of the Deposit Insurance Agency.