| IMF
CRITERIA |
POSITION
OF JDIC |
- The
deposit insurance scheme must be
explicitly defined in law
|
The
Jamaica Deposit Insurance Corporation (JDIC)
under the Deposit Insurance Act, 1998,
establishes a scheme for the protection of
depositors through the setting up and
management of a Deposit Insurance Fund. |
- Deposit
insurance schemes should resolve failed
depository institutions promptly
|
The
JDIC has the power to cancel the policy of
deposit insurance under certain conditions.
Notwithstanding the cancellation of a policy,
the amount of any insured deposit on the date
of cancellation less any subsequent
withdrawals therefrom, will continue to be
insured for a period of eighteen months from
the date of such cancellation. |
- Deposit
insurance schemes should impose
limitations on coverage
|
Basic
deposit insurance coverage available through
JDIC is described in the Deposit Insurance
Act. Coverage is up to a maximum of $300,000
in Jamaican currency to every individual
depositor of a policyholder. However, joint,
business and trust accounts are also
separately insured up to this limit. |
- Deposit
insurance scheme should have wide
membership
|
All
financial institutions operating under the
Banking, Financial Institutions and Building
Societies Acts ( the same as those supervised
by the Bank of Jamaica) are covered under the
scheme. |
- Deposit
insurance schemes should pay deposits
quickly
|
Section
18(2) of the Deposit Insurance Act requires
the JDIC to commence payments to eligible
depositors of failed policyholders not later
than three months after the closure of the
institution and / or cancellation of its
policy of deposit insurance.
If payments are not commenced by the specified
date, JDIC will be liable to pay interest
thereon from the specified date to the final
date of payment settlement. |
- Deposit
insurance schemes should have adequate
sources of funding to avoid insolvency.
|
JDIC
is a statutory body established with one
million Jamaican dollars as the initial
authorized capital. JDIC can levy an initial
and later annual premiums towards establishing
an appropriate Deposit Insurance Fund.
Premiums are levied against the total value of
insurable deposits held by the institution.
Section 17 (1) (a) of the Act makes provision
for advances by the Government and borrowing
from the private sector to bolster the
resources of the Fund where there is a
shortfall. |
- Deposit
insurance schemes should offer
risk-adjusted premiums (when risk can be
adequately measured).
|
Section
14(6) of the Deposit Insurance Act states
"the Corporation, with the approval of
the Minister, may prescribe different
percentages of insurable deposits and
different methods of payment for different
categories of financial institutions." |
- Deposit
insurance schemes should have accurate
information and disclosure of an insured
bank’s financial condition
|
Section
7 (2)(a) of the Deposit Insurance Act
stipulates that the JDIC is "entitled to
receive from the Bank of Jamaica upon request,
copies of its on-site examination reports on
policyholders which fall under its purview and
all material information relating to the
safety and financial soundness of
policyholders, including reports and returns
submitted by them and directions issued by the
Bank of Jamaica to them".
Section 5 (2)(a) of the Act also authorises
the Corporation to "make such inquiries
of a policyholder as to the conduct of its
affairs as may be prescribed". |
- Deposit
insurance schemes should grant no decision
making authority to Bankers to avoid
conflicts of interest
|
JDIC
is a public Corporation and is a separate
legal entity from the Central Bank (which is
also the regulator). JDIC through its
responsible Minister, has the ability to pass
Regulations, which allow the Corporation to
manage risks to the deposit insurance scheme.
A seven member Board of Directors (which
excludes any practicing banker) is responsible
for the policy and general administration of
the JDIC and the management of the Deposit
Insurance Fund.
The Chief Executive Officer is responsible to
the Board for the day-to-day business
administration of the Corporation and for the
execution of the policy of the Corporation. |
- Deposit
insurance schemes should take prompt
remedial actions
|
Section
5 (2) of the Deposit Insurance Act
states "for the purpose of the
performance of its function under this Act,
and subject to the provisions of this Act, the
Corporation may do anything and enter into any
transaction which in the opinion of the
Corporation, is necessary or incidental to its
function and in particular, and without
limiting the generality of the foregoing the
Corporation may in accordance with such rules
as may be prescribed, act as receiver or,
liquidator of any policyholder, or of its
holding company or subsidiary which becomes
insolvent, or appoint any person to act as
such; and in acting in any such capacity may
arrange for the restructuring of a
policyholder whether by merger with or
acquisition by another financial institution
or otherwise. |
- Deposit
insurance schemes should have close
relations with the lender of last resort
and the supervisor
|
JDIC
works closely with the Bank of Jamaica (lender
of last resort and supervisor) in all dealings
with its policyholders. The Governor of the
Bank of Jamaica is an ex-officio members of
the Board of Directors. |
