Bylaw for Amount and Method of Receiving Premiums
Approval letter no. H48367 T/100998 dated: 24.7.2013 of council of ministers with amendments from approval letter no. 49837 T/150501 dated: 1.3.2015 of the same council.
Article1. The following terms have been used in this bylaw:
a. Central bank: The central bank of Islamic Republic of Iran.
b. Fund: Deposit guarantee fund of Islamic Republic of Iran.
c. Credit institute: Bank or non-bank credit institute, deposit and building facilities institute and branch of foreign bank established according to law or authorization of central bank that is under supervision of central bank. Credit unions and Gharzolhasane fund are not considered as credit institutes.
d. Depositor: Person who attempts to deposit with credit institution.
e. Branch of foreign bank: Operational unit of a foreign bank that conducts banking operation in Iran with authorization and under supervision of central bank.
f. Newly established credit institute: Credit institute which obtains its establishment permit from central bank after this bylaw is communicated.
g. Guarantee limit: Maximum amount of deposits in Rials of any person whether in Rials or foreign currency in any credit institute which is under the guarantee of deposit insurance fund according to section (a) of article 5 of deposit guarantee fund articles of association and the N.B. of the mentioned article, subject of approval letter no. H47632T/102595 dated 12.8.2012 and its following amendment.
Article2. Payment of premiums to the fund is mandatory for all credit institutions and foreign banks.
N.B.1. Deposits of branch of a foreign bank that are covered by a guarantee fund institution in the country of origin equivalent to the minimum amount set by the fund, may be exempted from the fund membership.
N.B.2. In case the scope of guaranteed deposits of the foreign bank branch by the deposit guarantee fund in the country of origin is less than the fund’s scope of guarantee, or deposits of the foreign bank's branch do not have any guarantee in the country of origin, the branch of the related foreign bank should become a member of the fund in regards to the deposits the branch receives in Iran.
N.B.3. When issuing authorization for conducting banking operation regarding subject N.B.2., central bank is bound to take necessary measures regarding guarantee of deposits kept with foreign bank's branch in Iran and undertaken by relevant authority in the country of origin.
Article3. Prior to approving establishment of foreign bank's branch in Iran regarding subject N.B.2, Article 2, central bank should come to an agreement with relevant authority in the country of origin regarding the branch's method of communication with the fund including payment of premiums, time and condition of repayment of deposits to depositors when necessary and method of resolution of the foreign bank or its branch with the fund.
Article4. The fund is administered by the initial, annual and special premiums received from credit institutions.
Article5. The credit institution is bound to take action regarding payment of mentioned premiums to the fund according to this bylaw.
N.B. Premiums are received in form of cash deposits made by the credit institute to the Fund’s account with the central bank.
Article6. Membership premium paid by credit institute, in framework of this bylaw, is considered as acceptable tax expense of the same year for the institute.
Article7. Initial membership premium of credit institute is equivalent to two percent of minimum capital necessary for establishing a related credit institute as announced by the central bank.
N.B. Conversion basis for initial premium of foreign bank branch is the exchange rate of that particular currency with Rials, on the date of premium payment, as daily rate announced by the central bank. In cases were payment due date is not honored by foreign bank branch, the highest conversion rate in the allowed payment period or the date of payment, whichever highest, shall be the basis of calculation.
Article8. Credit institute registered prior to notification date of this bylaw is required to take action regarding payment of its initial premium according to this article within one hundred and twenty days after notification date of this article.
N.B 1. Newly established credit institute is required to initiate payment of its initial premium within one hundred and twenty days after receiving permission for activity from the central bank.
N.B 2. Initial membership premium of credit institute that does not initiate payment in due date is calculated as follows:
A = Minimum capital necessary to establish a credit institute, announced by central bank.
B = Difference in payment date and due date per month or fraction of a month.
Article9. Credit institute is bound to pay an annual membership premium to the Fund is collected as follows:
1- For the first year of fund activity, equivalent of %0.25 of average daily balance (calendar days of the year) of all deposits after deducting the statutory deposit up to the amount of Fund’d deposit guarantee ceiling in previous financial year.
2- Membership premium amount for second year and onwards shall be based on certain percentage of average weekly balance of each deposit account up to the amount of Fund’s deposit guarantee ceiling in previous financial year, determined by Fund’s board of trustees. The above mentioned percentage shall not exceed 1% and shall not fall below 0.25%
N.B.1. Fund is bound to notify credit institute with method of calculation and rate of membership premium every year by the end of month of Shahrivar (August 20th) for the same year.
N.B.2. For newly established credit institute, annual membership premium for the year of establishment should be calculated proportional to commencement date of activity and deposit taking, by end of the same year, determined by central bank.
N.B.3. Foreign currency deposits balance shall be calculated in local currency by the rate announced by central bank and shall be the basis for annual membership premium calculation.
N.B.4. Whenever the fund resources exceed 5% of the deposits subject to guarantee of deposit institutes, the annual membership premium rate may be decreased from the minimum amount set in this article with recommendation of central bank and approval of board of ministers.
N.B.5. Credit institutes subject to supervisory or disciplinary measures should not receive a decrease in their annual membership premiums.
Article10. Credit institute is bound to pay its annual membership premium by the end of month of Shahrivar (August 20th) of the following year at the latest.
N.B.1. In case of emergency conditions and insufficiency of fund resources for payment of deposits of depositors, the fund may secure its resources by obtaining premiums from credit institutes prior to payment due dates of premiums.
N.B.2. Initial membership premium of credit institute which does not initiate payment in due date is calculated as follows:
C = Constant percentage determined by Fund’s board of trustees according to clause (2) of Article (9) of this bylaw.
B = Difference in payment date and due date per month or fraction of a month.
Article11.Newly established credit institute with origins of monetary institutions, that has been active prior to establishment of the institute, is bound to calculate the initial premium according to Article (7) and the annual premium with reference to year of establishment as per clause (2) of Article (9) of this bylaw and to credit the amount to the Fund’s account after the auditor authorized by the central bank has approved and announced the authentication of assets valuation and their final transfer as well as related deposits final transfer from the related monetary institutions to the described credit institute.
Article12. Independent auditor of credit institute is bound to audit the calculation process for annual and special premiums and to comment on the reports of auditor and legal inspector regarding non-compliance with the above mentioned process and to forward one copy of his report to the Fund.
Article13. Proportional to the risk in credit institute activities, a special membership premium is received from the credit institute up to a maximum of twice a year.
N.B. Receiving premiums shall be based on standards set by the central bank on grounds of risk measurement and according to instructions which are recommended by the central bank and approved by ministers who are members of the money and credit council.
Article14. Premiums paid by credit institutes are in no circumstances refundable.
Article15. In case credit institute refuses to pay its membership premium within three months of set deadlines, the Fund is bound to report the situation to the governor of central bank for implementing regulatory measures including disqualification of directors and also measures mentioned in clause (11) of Article14 of money and banking law of the country - ratified in 1972-which includes limiting deposit receiving operations by the offending credit institute. Implementing the aforementioned clause is subject to obtaining necessary authorization from the money and credit council.
Article16. Premiums received from credit institutes shall be allocated for repayment of deposits of the mentioned bankrupt institutes' depositors after deducting expenses relating to administration of the fund.
Article17. In order to fulfill its legal obligations, the fund may proceed to obtain required information and statistics from credit institutes and the central bank. Central bank and credit institutes are bound to furnish the requested information and statistics by the fund in compliance with relevant laws at the earliest.
N.B.1. Fund is bound to take the information and statistics received subject of this article as confidential.
N.B.2. Credit institute is bound to take necessary measures with compliance to relevant laws in order to provide pertinent information to the fund concerning deposits it keeps.
N.B.3. In case credit institute refuses to provide the above mentioned statistics and information, or provides false information, it shall be subject to contexts of Article 15 of this bylaw.
Article18. Credit institute should not spread propaganda regarding guarantee of its deposits beyond limitations inserted in this bylaw and statutes of the fund subject of approval letter no. H47622T102595 dated 12.8.2012 and its corrigendum subject of approval letter no. H47632T48003 dated 11.5.2013
Article19. Necessary budget for setting up the fund is provided by the central bank. The mentioned expenses should be settled with central bank from fund resources based on agreement after receiving membership premium from credit institutes.
Article20. Central bank is bound to notify credit institutes about required necessities for membership and adherence to the fund regulations within one month after notification date of this bylaw so that they can include it in their articles of association. Credit institutes are also bound to correct their articles of association according to necessities notified by the central bank within two months after notification date of this bylaw and to obtain approval of money and credit council.
The above mentioned is direct translation of council of minister's decree No. H48367 T/100998 Date: 24.7.2013
In case of any discrepancy between the Persian version and the English version of the material, the Persian version shall prevail.