Executive instructions on honoring of obligations

Executive instructions on method of honoring Deposit Guarantee Fund obligations concerning refunding deposits of depositors of bankrupt credit institutions.

In repayment of deposits of bankrupt credit institute’s depositors

With reference to provisions of article (95) of Islamic Republic of Iran's Fifth Five-Year Development Plan and in alignment with implementing the final end of article (24) of Deposit Guarantee Fund’s Articles of Association, and provisions of article (25) and (26) of Deposit Guarantee Funds’ articles of association and article (16) of Bylaw for Amount and Method of Receiving Premiums and with the aim of explaining the method of repayment of funds belonging to depositors of bankrupt credit institute, Executive instructions on method of honoring Deposit Guarantee Fund obligations concerning refunding deposits of depositors of bankrupt credit institutions in repayment of deposits of bankrupt credit institute’s depositors, which hereafter shall be referred to “instructions”, shall be determined as follows:
Article1. The terms used in this instruction are described as follows:
a. Central bank: The central bank of Islamic Republic of Iran.
b. Fund: Deposit guarantee fund of Islamic Republic of Iran.
c. Credit institution: Bank or non-bank credit institution and branch of foreign bank established according to law or authorization of central bank which is under supervision of central bank.
d. Branch of foreign bank: Operational unit of a foreign bank which conducts banking operation in Iran with authorization and under supervision of central bank.
e. Bankrupt credit institution: Credit institution which is declared bankrupt according to court order based on Article 41 of Money and Banking law.
f. Crisis committee: A committee consisting of governor of central bank, a member of executive supervisory board supervising the supervision department of central bank, Director general of supervision on banks and credit institutions of central bank and CEO of the Fund.
g. Depositor: Person who attempts to deposit with credit institution.
h. Deposits subject to coverage by guarantee: Deposits recognized by central bank according to subsection (3) of approval letter no. H52224T/67574 dated Aug 18th 2015 of council of ministers.
i. Acting credit institution: A credit institution elected by crisis committee for refunding credit institution’s depositors’ deposits subject to coverage by guarantee.

j. Guarantee ceiling: Maximum amount of deposits in Rials of any person, whether in Rials or foreign currency in any credit institution which is under the guarantee of deposit insurance fund.
Article 2) The following information is constantly updated in the Fund’s website and is available for all depositors:
2-1) List of member credit institutions of the Fund;
2-2) Guarantee ceiling of total deposit balances subject to guarantee, of each depositor, whether in Rials or in foreign currency per credit institution;
2-3) Rules and regulations related to how depositors benefit from deposit guarantee.
2-4) Context of this instruction and other criteria related to deposit guarantee.
Article3. Deposits subject to guarantee of the Fund, consisting of nineteen types of deposits, are listed below according to subsection 3 of the approval letter no. H52224T67574 dated Aug 18th 2015 by board of ministers, and are communicated by the central bank and are uploaded and updated in the Fund’s website.

Article4. The amount of obligations of the Fund to every depositor is calculated based on the sum of deposit balances subject to guarantee (deposits subject of article 3) for each depositor whether in Rials or foreign currency, per institution, until the end of last day prior to issuance of bankruptcy decree, up to the maximum guaranteed ceiling.
NB1) According to the documents of Credit institution, the latest agreed amount of stock in shared deposit account for each depositor is the basis for calculating the amount of fund obligations to each depositor.
NB2) Exchange rates of foreign currency deposits subject to guarantee are rates announced by the Central Bank in the last day prior to issuance of bankruptcy verdict.
Article5. Credit institute is bound to design and implement the information systems such that the following information could be obtained, processed and presented at the end of each day:
3-1) Credit institute’s name;
3-2) Province name;
3-3) City name;
3-4) Branch name;
3-5) Depositor customer number;
3-6) Depositor name and surname;
3-7)Depositor ID card number (national code);

3-8) Account number(s) of depositor’s deposit(s) subject to guarantee;
3-9) Opening date of each of depositor’s accounts subject to guarantee;
3-10) Headings of accounts subject to guarantee;
3-11) Balance of each depositor’s each account subject to guarantee in Rials and foreign currency, separately;

3-12) Sum of account balances subject to guarantee of each depositor in Rials and foreign currency, separately;
3-13) Number of deposits subject to guarantee per branch, city and province;
3-14) Number of depositors subject to guarantee per branch, city and province;
3-15) Sum of account balances subject to guarantee of each depositor per branch, city and province;
NB1) By establishing a specific unit, the CEO and board members of the Fund are bound to design and implement information systems such that at the end of each day the unit can process and present the information. The precision in implementing this article is undertaken by the above mentioned executives.
NB2) Supervising the implementation of the above mentioned article and verifying it every six months and announcing the results to the fund is undertaken by the central bank.
Article6. In order to gain general public trust, credit institution is bound to arrange a mechanism by which each depositor may have access to information and amount of guarantee coverage of all types of his deposits subject to guarantee, through credit institution’s information and communication terminals.
Article7. The method of scheduling and refunding the covered deposits, based on deposit information, shall be initially announced and carried out within 20 days after issuance of bankruptcy decree for the credit institution by the qualified court and appointment of resolution managers and notifications communicated to the fund by the crisis committee.

NB1) Repayment of depository funds in its entirety or in installments is carried out by the acting credit institute.
NB2) Repayment of guaranteed deposits which are previously confiscated or blocked is subject to the order of bankruptcy case judge.
NB3) In order to inform depositors of the bankrupt institute, the fund shall notify the central bank regarding the method and scheduling of repayments of guaranteed deposits and at the same time shall publish them in its website.
Article8. The fund is bound to notify the acting credit institute with list of depository information and notifications received from crisis committee for informing and authenticating the owners of deposits and acknowledgment of repayment method of guaranteed deposits according to this directive and instructions of qualified authorities, subject of article7.
Article9. The deadline for depositors subject to guarantee in order to approach the acting credit institute is determined by the fund in coordination with crisis committee, and the acting credit institute is bound to return the remaining funds and the list of people who have not approached the credit institute to the fund after expiry of the deadline.
Article10) Determining the branches, visiting time, information and documents required for submitting to the acting credit institute and providing of information in this regard shall be according to a manual of style arranged and implemented by the Fund in coordination with the acting credit institute and relayed to the crisis committee.
Article11) All the expenses related to the acting credit institute in implementing payments of guaranteed deposits based on financial documents, are borne by the Fund.
Article12) The acting credit institute is bound to provide the Fund with weekly reports of its performance related to payment of guaranteed deposits.
Article13) In order to conduct financial operations for repayment of guaranteed deposits, the acting credit institute is bound to initiate opening an account with the central bank of the Islamic Republic of Iran and to notify the Fund of the proceedings.
Article14) Based on the depository information received from the crisis committee, the fund is bound to deposit equivalent of 20% of estimated necessary financial resources to an account of the acting credit institute with the central bank, as announced by the acting credit institute.
NB) Arrangements regarding continuation of depositing funds to the mentioned account for repayment of guaranteed deposits to acting credit institute’s account with the central bank and the method of settling the mentioned account, shall be determined based on a manual of style arranged by the fund after obtaining the views and considerations of the acting credit institute.
Article15) In order to make sure of correct implementation of guaranteed deposits repayment operation to depositors, by observing the subject rules and regulations, decrees of the bankruptcy case judge, resolution executives and crisis committee, an audit institute is appointed by the Fund in coordination with the central bank from a list of audit institute’s approved by the central bank. The institute is bound to present its performance report to the Fund and to the director of board of trustees.
Article16) In case of discrepancy between the information, certificates and documents provided by the depositor and the mentioned information in depository information list, the acting credit institute is bound to stop payment to the depositor and to inform the Fund for determining the outcome.
Article17) In implementing article (25) of the articles of association, the Fund is bound to arrange two forms and receipts as follows:
1- Form (A) For transferring legal rights relating to repayment of guaranteed deposits of credit institutes’ depositors whenever credit institutes go bankrupt.
NB) In order to make preparations for implementation of article (25) of Deposit Guarantee Fund Articles of Association, CEO and board of directors of all credit institutes are bound to complete and sign Form (A) and to present the mentioned form to the Fund.
2- Form (B) The acting credit institute is bound to have the signature and fingerprint of the depositor when repaying the guaranteed deposits to depositor and to submit the forms to the Fund once the repayments are completed.
3- The acting credit institute, in coordination with the Fund supervising the receipt of guaranteed deposit by the depositor, is bound to prepare a payment receipt and to have the depositor sign and finger print the receipt at the time of payment.
Article18) The CEO of the Fund is bound to provide monthly reports of actions taken regarding repayment of guaranteed deposits of bankrupt credit institute’s depositors by the acting credit institute to the crisis committee and board of directors of the Fund.
This instruction including 18 articles and 9 notes was ratified in the twelfth meeting of the board of trustees on Aug 9th 2017.