Azernews.Az

By Nazrin Gadimova

Azerbaijan Deposit Insurance Fund (ADIF) has carried out compensation payments on insurance over Royal Bank OJSC's bankruptcy, the Fund said on July 26.

As of July 1, ADIF paid compensation in the amount of 13 million manats, which is 88.8 percent of the reimbursable sum.

"According to the registry of liabilities to depositors, 5,759 insured depositors were provided with compensation totaling 26.5 million manats on insured deposits. Some 14.7 million manats or 55.5 percent of these funds were paid out," the Fund said.

The total number of Royal Bank's depositors amounted to 7,063 people.

Acceptance of applications for compensations to Royal Bank depositors has been suspended since July 23.

Payment of compensation has been carried out from August 1, 2012, through Muganbank, Bank Respublika and AGBank. The accounts of depositors in 33 branches of Royal Bank have been transferred for services to be rendered by 27 branches of the three agent banks.

The license for Royal Bank's operation was invalidated by the Central Bank of Azerbaijan (CBA) on July 12, 2012.

Furthermore, ADIF Executive Director Azad Javadov said that the Fund will not insure individual deposits in Azerbaijani banks at a rate of more than 10 percent from August 1, 2013.

Accordingly, in case of an event which requires insurance (bank failure), compensation will not be paid to insured depositors on bank deposits at a rate exceeding 10 percent.

According to Javadov, the ADIF board of trustees decided during its latest meeting to reduce the ceiling on insured deposits from 12 to 10 percent. The Fund has left the maximum level of insurance coverage for one contribution unchanged at 30,000 manats.

"The change that will go into effect on August 1 is the result of the continuing decline of interest rates on deposits in the country," Javadov said.

Currently, deposits placed in ADIF member banks at an annual interest rate of over 12 percent are not insured by the Fund, and compensation is not provided for them.

Azerbaijan Deposit Insurance Fund was founded on August 12, 2007 after the Law on Deposit Insurance was passed by the parliament of Azerbaijan and signed by President Ilham Aliyev. The purpose of establishing the Deposit Insurance Scheme is to prevent the risk of losing money deposited by people and to ensure the sustainability and development of the financial and banking system whenever banks and local branch offices of foreign banks become insolvent. 42 of the 43 banks operating in the country are members of the Fund.

The official exchange rate as of July 26 is 0.7843 AZN (manats) per USD.