:: Twelve Facts About The JDIC ::

1. The Jamaica Deposit Insurance Corporation (JDIC) is an independent statutory organization set up by the Government to protect depositors.

2. In light of the number of bank failures of the mid-nineties, the Government of Jamaica recognized the need for a formal system of deposit insurance.  This would replace the then discretionary system that was used to repay the depositors of failed institutions such as the Blaise and Century National Groups.

3.  In the past when a bank failed there was no guarantee as to how much the depositors of the failed institution would be refunded.

With  the establishment of the JDIC and the passing of the Deposit Insurance Act 1998, all depositors of a bank or other insured deposit-taking financial institution that fails will get back up to a maximum of $600,000.

4. Deposit insurance schemes in every country have two primary goals.  Firstly, that of protecting depositors, especially the smaller and less sophisticated ones, should a financial institution fail.  Secondly, to promote confidence and stability in the financial sector, thereby guarding against deposit runs on  other otherwise healthy institutions.

5. The main goals of the JDIC  are to:

• Protect depositors by providing the highest level of coverage possible to small depositors (over 90% of the total number of deposits are covered under the Scheme).
• Provide a clearly defined system for dealing with problems that may arise in financial institutions covered under the scheme.
• Restore and maintain confidence in deposit-taking institutions and by extension contribute to stability in the financial sector.

6. The JDIC is managed by a seven member Board of Directors drawn from the public and private sectors.  These include three ex-officio directors:  the Governor of the Bank of Jamaica (BOJ), the Financial Secretary and the Chief Executive Officer.

The other four Directors, including the Chairman, are appointed by the Minister of Finance under whose Ministry the Corporation falls.

7. The main functions of the Corporation are to:

• Provide insurance against the loss of deposits
• Levy premiums for the  Deposit Insurance Fund
• Manage and administer the Fund

8. All deposit-taking institutions falling under the Banking Act, the Financial Institutions Act and the Building Societies Act are legally required to become members of the Deposit Insurance Scheme.

These  institutions are:              

• Commercial Banks
• Trust  & Merchant Banks
• Building Societies

9. Member institutions must pay premiums annually, calculated as a percentage of their insurable deposits.  These premiums make up the Deposit Insurance Fund which is used to pay depositors if an insured institution fails.

10. The Corporation works closely with the BOJ, which is the Regulator and Supervisor of commercial banks, merchant banks and building societies.

11. Where there is a failure of an insured financial institution, the JDIC will pay from the Fund, to depositors the insured portion of their deposits as soon as possible (usually within three months after the date of closure of the institution).

12. Depositors will not necessarily lose the uninsured portion of their deposits, but may receive this portion or some part of it when the assets of the failed institution are sold by the liquidator.