JSC KAZAKHSTAN DEPOSIT INSURANCE FUND
Reimbursing depositors via
agent bank
by Saule Shenol
Deputy Chair
The core function of KDIF
- paying out reimbursement to depositors of a
forcibly liquidated member bank
IN EFFICIENT AND TIMELY MANNER
Applicable laws and regulations
Law On banks and banking
activity in the Republic of
Kazakhstan
Law On mandatory insurance
of deposits placed with the
second-tier banks of the
Republic of Kazakhstan
Rules for selecting an agent bank and
establishing qualifying standards for
an agent bank (approved by the
Central Bank of Kazakhstan)
Rules for making payouts to the
depositors of a forcibly liquidated
bank (approved by the KDIF’s Board
of Directors)
The commitment of KDIF to
reimburse depositors
- Unconditional and irrevocable, and commences from the
date of enactment of the court’s ruling on the memberbank’s forced liquidation
- Terminate 1 year after the entry record is made to the
National register of business identification numbers about
the forced liquidation of a member bank,
but no earlier than 5 years after the date of
enactment of the court decision on the forced
liquidation of a member bank
Payout schedule
1
2
3
4
Payout schedule (2)
1. As early as within 5 or 7 business days from the date of enactment of the
court’s decision on liquidation, the depositor’s register and
calculation of reimbursement commitment thereof (hereinafter -the depositors’ register) must be submitted by the failed bank’s
temporary administration or liquidation commission, respectively, to the
KDIF.
2. Within 14 business days from the above date, KDIF must publish
information on:

commencement of and the schedule for payout processes

name of an agent bank (or JSC “Kazpost”) assigned,

the list of supporting documents and filings for the reimbursement
request
The information is published online and in print media in Kazakh (state
official) and Russian languages.
Payout schedule (3)

The depositors request reimbursement of funds with the agent
bank.

The agent bank must pay out (or otherwise decline to do so)
within 5 business days upon receipt of the application and filings.
When the above period expires, and the agency service agreement
terminates, the depositors are entitled to request reimbursement
from KDIF (funds are transferred to a bank account placed with any
member-bank or by post).
Coverage
In the event of forced
liquidation of a
member bank
KDIF will reimburse depositors in the
amount of deposit balance (accrued
interest excluded) limited to
5 million Kazakhstan tenge
(32.2 thousand USD)
in consideration of setting off the
claims by, and liabilities of depositor to
the bank (e.g. bank guarantees issued,
loans extended), as instructed by the
failed bank’s liquidation commission
To claim the excess amount of the
deposit balance over the deposit
coverage limit, the depositors file claim
to the liquidation commission for
reimbursement of the remainder in
accordance with the statutory
creditors’ hierarchy
The specific features of payouts

payout of a cumulative amount of deposit coverage for all insured deposits
in various currencies and other terms placed with one single member bank
to one depositor

payout of a separate deposit coverage for deposits placed with several
different banks per each member-bank

all deposits will be reimbursed in Kazakhstani tenge, including those in
foreign currency, at market exchange rate as of the date of enactment of the
court’s decision on the bank’s forced liquidation

payout of deposit coverage by the power of attorney to another person is
allowed

payout of deposit coverage to heirs in case of death of depositor is allowed
provided the appropriate documents are filed

payout of deposit coverage to the legal representatives of a minor
Payouts through an agent bank

The agent bank is assigned on a competition basis
from among the member banks.

If none of the applicants conforms to the requirements,
National postal operator “Kazpost” JSC will be assigned
to provide these services.

KDIF awards the winning member bank
(or JSC “Kazpost”) with an agency service agreement.

No fee for services of an agent bank will be paid.
Requirements for obtaining the
member-bank’s status
1) member of the deposit insurance system
2) continuously (over 6 latest months) compliant with
prudential regulations and the minimum reserve
requirements
3) licensed for cash operations
4) no valid sanctions by the Central bank
The basic criteria for selecting an
agent bank
complies with the application for an agent bank
requirements
 financially stable
 having extensive network of offices and
branches
 experienced in making payouts to the
depositors
 ready to provide services on adequate
commercial terms, etc.

Throughout the history of KDIF’s
operations it has faced 3 bank failures,
namely:


“Komirbank” JSC (2002)
“Nauryz Bank” JSC (2005)
163 thousand insured depositors, KDIF’s
commitment of 800 mln. tenge (5 mln. USD)

“Valyut-Transit Bank” JSC (2007)
270 thousand insured deposits, KDIF’s
commitment of 14 billion tenge (91 mln. USD)
Specific features of the failed banks’ cases
JSC “Nauryz Bank Kazakhstan”
Large number of “dormant accounts”.
2.20,000 depositors reimbursed in the amount of 700 million tenge.
1.
JSC “Valyut-Transit Bank”
1.unacceptably
low quality of the depositors’ register delivered by the
liquidation commission
2.68,000 depositors reimbursed in the amount of 14 billion tenge
3.a slight deficit of special reserve fund was covered largely with the
help of preventive organizational measures taken by KDIF
Operational risks associated with
reimbursement procedures
Pimary role of the KDIF:
- to ensure effective and timely reimbursement processes (i.e. timely
commencement, immediacy, accuracy and completeness of payouts, and
awareness of interested parties)
Major challenges:


the depositors’ register of low or unacceptable quality provided by the
liquidation commission to the KDIF
omissions by the agent bank ‘s staff in the reimbursement process.
Solution methods:
- Establishing requirements to member-banks’ accounting processes and maintenance
of automated banks’ information systems on insured deposits and verification of
their compliance;
- Developing effective automation of the following procedures:
 1) the depositors’ register provided by the liquidation commission of the failed
banks;
 2) payouts of the deposit coverage by the agent bank
- Employment of alternative reimbursement methods (upon research and study of
IADI members’ relevant experience)
Preparatory measures taken by the
KDIF
In 2007
the requirements for banks on the generation
and export of the depositors’ register
from the automated bank information
system were established
Since 2009
KDIF has been conducting inspections at
member banks to ensure the depositors’
registers can be generated in accurate
manner and in the prescribed timeframe
To automate procedures performed by the
KDIF’s staff during onsite inspections at
member-banks and in case of bank
failure, KDIF developed “SALT”
Information System
“SALT” Information system’s
functions
- prior to the bank’s forced liquidation:
+ validation of the depositors’ records against the KDIF’s requirements and their crosschecking against general ledger of a member bank (complete analysis of data, detection of
errors, generating reporting data)
- after the bank’s liquidation of a member bank:
1.
2.
3.
4.
5.
6.
7.
upload and validation of the depositors records against the requirements and
their cross-checking against general ledger of a member bank (complete analysis of
data, detection of errors,
validation of the depositors register’s corrective calculations by the liquidation
commission ; their accepting/rejecting on a case-by-case basis,
upload of payouts reports prepared by an agent bank and their reconciliation
with the depositors’ register on an automated basis;
cross-checking of the reimbursed depositors’ files with the payouts’ reports
prepared by an agent bank and the depositors’ register via the special System’s
interface (manual reconciliation);
generating reports on the automatic and manual reconciliation of the payouts’
report against the depositors’ register;
tracking of the per-customer payouts and aggregate depositor payouts ;
automatic generating of reports required under the legislation as well as
customized reports with the goal of analyzing data loaded into the System.
Structure of the depositors’ register
Depositor’s data
Bank account details
Account balances
Depositor’s index
Headline, number and date of
the bank service agreement (on
the current or savings , card
account or other), or credit /
bank guarantee agreement,
date of agreement
Deposit’s initial account balance and
the amount of accrued interest
Full name
Currency of deposit and
counter-claims of the bank to
depositor
Amount of the counter-claims of the
bank to depositor
Number, date and issuing
authority of identification
document
General ledger account
Balance of liability of a depositor to
a bank resulting from set-off
Taxpayer number
Account identification number
for a deposit, current account,
card account, loan, accrued
interest on deposits and
accruals on liabilities
Balance of liability of a bank to
depositor resulting from set-off
Individual identification
number
Reference agreement
Coverage amount owed to depositor
Address and phone number
Balance of liability (including
interest accrued) to a depositor after
making payouts
Structure of the report on payouts
 Depositor’s data




Depositor’s index
Full name
Identification document
Individual identification number
 Bank account details



Currency
Number and date of the bank service agreement
Account identification number for savings, current or card account
 Payouts data



Amount of reimbursement made
Date of the depositor’s application for reimbursement
Settlement date
 Agent bank details

Branch of agent bank
Automated reimbursement process
scheme
Liquidation
commission
The KDIF
Agent bank
14 business days
Loading the depositors’
Generating (incl.
exporting) of the
depositors’ register
(within 5 business
days from
launching its
generation)
The
register
Cumulative
report on
payouts
register into the information
1.
system (in XML format), its
The
verification for accuracy and register
reconciliation against general
ledger
2.
1. Loading report on payouts into
the “SALT” Information system
2. Automatic reconciliation of the
payouts’ report against the
register
3. Cross-checking of the reimbursed
depositors’ files with the payouts’
reports prepared by an agent bank
and the depositors’ register via the
special System’s interface (manual
reconciliation)
4. Generating reports on the
automatic and manual
reconciliation of the payouts’
report against the depositors’
register
Loading the depositors’
register into the
information system of
an agent bank
Payouts
3. Generating reports on
payouts and their
submission along with
the reimbursed
depositors’ complete
files to the KDIF
Report on
payouts
Thank you for attention!