Deposit Insurance Cover
What is the maximum deposit amount insured by the DIC?
Each eligible deposit (see section on Insured Deposits) in a member institution is insured up to a maximum of B$50,000 per depositor. However, provisions exist in the law for the Minister, by order, on the advice of the Central Bank of The Bahamas, and after consultation with the member institutions, to prescribe a greater amount.
⌃Is interest owing on a deposit included in the insurable amount?
Yes. The DIC insures both principal and interest for eligible deposits at each member institution, up to a maximum of B$50,000. For example, if an individual has a savings account with a balance of $10,000 and accrued interest of $3,000, the total $13,000 would be insured by the DIC. If, however, the savings account balance was $55,000 and accrued interest, $5,000, then $10,000 would not be covered by deposit insurance.
⌃How is interest calculated in the event of a failure?
Accrued interest will be calculated on eligible deposits up to the date of the closure of the member institution.
⌃How does the closing of an institution affect interest accruing on a deposit?
When a member institution is closed, interest on deposits immediately ceases to accrue, whether or not the date of maturity of the deposit was beyond the date of closure.
⌃I am a non-resident of The Bahamas. Are my deposits protected?
Your place of residence or nationality does not affect deposit insurance protection. Bahamian dollar deposits placed with a member bank of the DIC is protected up to B$50,000 per depositor per member bank.
⌃Are foreign currency deposits insured?
No. Only eligible deposits in The Bahamas and payable in Bahamian dollars are insured.
⌃Deposit Insurance Scheme
What is deposit insurance?
Deposit insurance is an arrangement designed to minimize or eliminate the risk of loss of Bahamian dollar savings, in the unlikely event of the closure of a member institution of the Deposit Insurance Corporation (DIC).
⌃What is the Deposit Insurance Corporation?
The Deposit Insurance Corporation is the agency created in 1999, under the Protection of Depositors Act, to provide for the insurance of Bahamian dollar deposits, so as to promote the stability and public confidence in the Bahamian financial system. Please refer to [About DIC » Corporate Governance - How the DIC is operated, managed and organized] for more details.
⌃What does it mean for a bank to be “closed”?
For the purposes of deposit insurance protection, a bank is deemed to be closed when the institution is ordered by the Central Bank of The Bahamas to wind up its business under section 18 of the Banks and Trust Companies Regulation Act.
⌃Is the Deposit Insurance Corporation part of the government?
No; however, the DIC is established as a “body corporate” or corporation under the laws of The Bahamas, and is ultimately accountable to the Minister of Finance. The operations of the DIC are managed by a Board of Management. Please refer to the organization of the DIC.
⌃Must I apply or register for deposit insurance protection?
No, you do not need to apply or register for protection. Deposit insurance is provided automatically for eligible deposit accounts at DIC member institutions.
⌃Who pays for DIC insurance?
DIC member institutions pay annual premiums to the DIC to cover the cost of insuring Bahamian Dollar deposits. Members are currently assessed 1/20 of 1% per annum of their deposit liabilities.
⌃What is the Deposit Insurance Fund?
The Deposit Insurance Fund (the Fund) represents the accumulated premium contributions of member institutions, used to provide deposit coverage in the event of the closure of a member institution. The DIC protects the DIF by investing these funds in safe, liquid assets, such as Treasury bills and government bonds.
⌃Are all banks members of the Deposit Insurance Corporation?
No. Membership in the DIC is compulsory only for Bahamian Dollar deposit taking institutions. Please refer to the list of DIC member institutions.
⌃If any bank goes bankrupt in The Bahamas, are my deposits covered?
No. Not all banks are covered under the DIC. Please refer to the listing of DIC member institutions.
⌃What are the factors trigging deposit insurance payments?
The DIC may decide that a deposit insurance payout should be made if: a. the Central Bank has ordered the closure of a member institution; or b. the Central Bank has determined that a member institution is insolvent, is unable or is likely to become unable to meet its obligations, or is about to suspend payments.
⌃Why is deposit insurance necessary? Isn’t the Bahamian banking system safe?
Yes, The Bahamas banking system is safe and well regulated. The Central Bank of The Bahamas has rules to ensure that banks are well managed, well capitalized and have enough liquidity to meet any unforeseen needs. Deposit insurance is just another layer of protection for small depositors. These are hard-earned savings and, therefore, it is better to build up an insurance fund than wait for a crisis to happen. Experience elsewhere has shown that if you have a mechanism in place to guarantee the safety of deposits, people are less likely to panic if, and when, things go wrong.
⌃Insured Deposits
What types of deposits are insured?
Bahamian dollar deposits in checking, savings, demand and time accounts held in member institutions are insurable under the DIC.
⌃Are there any other bank liability instruments covered by deposit insurance?
Yes. Certain cash liabilities in respect of which a member institution is primarily liable, and has issued a certificate, receipt, cheque, money order, draft or other instrument, are treated in the same manner as a deposit. These would be insured, in the aggregate with other eligible deposits, as the case may be, up to the maximum of B$50,000.
⌃Are there any deposit types that are not covered by deposit insurance?
Yes. Not included in deposits are letters of credit, stand-by letters of credit or instruments of a similar nature, subordinated debts, preference shares, interbank deposits, foreign currency deposits, deposits of Government and statutory corporations, deposits of foreign Governments, deposits in any financial institution wholly owned by the Government, and deposit from affiliates.
⌃Who are covered by deposit insurance?
Individuals and non-bank depositors, such as sole proprietorships, partnerships, companies and other unincorporated entities, like associations and societies, are covered by the deposit insurance.
⌃Does deposit insurance protect the interest of other creditors?
No. Deposit insurance protection is only extended to eligible deposits.
⌃If I have deposits in several banks, will they be aggregated for deposit insurance protection purposes?
No. Your deposits in different member institutions are protected separately. The B$50,000 deposit insurance limit is applicable to each depositor in respect of deposits held in each member institution.
⌃Can deposit insurance protection be increased by depositing funds into several branches of the same bank?
No. In the case of a member having more than one branch, the main office and all branch offices are considered as one institution. So, if a depositor opens one or more savings/fixed deposit accounts in one or more branches of a member institution, all of these are added together, and the maximum insurance cover is available up to B$50,000.
⌃What is the meaning of the terms “same right and capacity?
This term refers to the nature of the ownership of the deposits with member institutions, i.e., whether they are single (individual), joint or trust accounts.
⌃Is insurance protection increased by placing funds in two or more types of deposit accounts in the same institution?
No. Deposit insurance is not increased merely by dividing funds held in the same right and capacity among the different types of deposits available. For example, chequing and savings accounts held by the same depositor in the same right and capacity are added together and insured up to a maximum of B$50,000. However, deposits held in different rights and capacities, such as joint account or trust accounts, are treated separately from the single accounts and quality for insurance cover up to the maximum of B$50,000
⌃What happens if I have pledged my fixed deposit as collateral for a loan? Will this be covered by the DIC?
Yes. In such cases, the DIC insurance extends to the pledged deposits, up to the insurable limit of B$50,000.
⌃What happens to cheques which are not cleared on a depositor’s account before the business of the institution is closed?
Those cheques will not be paid or charged against the account because the action by the Central Bank to suspend the operations of the institution will cause all accounts to be frozen at the date of suspension. Such cheques will be returned and usually will be marked "drawee bank closed", or "refer to drawer". This should not therefore reflect on the credit standing of the institution's depositor. However, it is the depositor's responsibility to make funds available to creditors who received cheques that were returned and did not clear through the depositor's account because of the suspension of the member institution.
⌃Joint Accounts
What is a joint account?
A joint account is one owned by two or more persons, where each co-owner has signed the account’s signature card and each may withdraw monies from the account.
⌃How are joint accounts insured?
The DIC will deem the interest of co-owners in joint accounts to be equal, unless there are records to show otherwise. Joint accounts are insured separately from any individually owned deposit account. For example, if a husband and wife are co-owners of a savings account, and each owns a savings account, the joint account and each of their savings accounts are separately insured, up to the maximum insurable amount.
⌃What happens if a person has an interest in more than one joint account?
In this case, each account holders’ interests is aggregated and then, where applicable, combined with his or her personal account and the total amount is insured up to a maximum of B$50,000. For example, if a husband and wife have a joint account of $50,000 and the wife has a joint account with her mother of $60,000, and an individual account of $10,000, her total deposits of $65,000 would be covered up to the maximum of $50,000. In this case, $15,000 would not qualify for deposit insurance coverage.
⌃Will changing the order or the names on a joint account alter the deposit insurance coverage?
No. The order in which the names appear on a joint account (e.g. “Mary and Henry” or “Henry and Mary”) does not alter the coverage. Also, the words “and” and “or” does not matter in the account names.
⌃Loan Transactons
What happens if I also have a loan at a bank where I maintain my savings?
All loans are deducted from the deposit balances in determining the insured amount. For example, if you have a deposit of $50,000 and a loan of $15,000, then your ensured balance would be $35,000.
⌃Would the borrower’s obligations to the institution continue after the institution is closed?
Yes. Persons who have borrowed money from institutions that have been closed must make payments on the same terms and conditions attached to their loan contracts with the institutions.
⌃Making a Claim
How do I go about filing a claim?
A depositor must file a claim for insurance on the official claim form within twelve (12) months from the date of closure of the DIC member institution. Official claim forms are to be provider by the liquidator. It is advisable that claims be filed as soon as possible after the announcement of closure.
⌃What happens if a depositor fails to file a claim within the required twelve (12) month period?
Claims not filed within the 12 month period are not eligible for deposit insurance. If the twelve (12) month period has passed, a depositor’s claim, by affidavit, must then be filed with the court-appointed liquidator, which may be the DIC. Claims submitted after this specified time are made against the assets of the closed member institution, and paid, pro rata, as they are collected and sold.
⌃Must a claim be filed in person?
No. Claims must be supported by evidence of deposit ownership and may be made by depositors in person or in writing supported by affidavit. Where payment is made to a person other than the depositor, the Corporation may require the person to execute a contract of indemnity in respect of the amount paid. Correspondences should be forwarded to the DIC using the official contact information.
⌃How does a depositor establish an insurance claim?
Prior to any payment being made, every depositor will be required to provide original evidence of deposit ownership, such as a passbook, certificate of deposit, or the last statement (with paid cheques if applicable), and fill out an official claim form. Passbooks, certificates of deposit and other documents used to establish the claim for insurance must be surrendered on receipt of the deposit insurance payment. Following this process, the DIC will automatically make arrangements for depositors to be paid either by cheque or through accounts opened for them in another bank.
⌃How long does it take for the DIC to settle claims?
The DIC aims to pay valid claims as soon as possible, but must thoroughly examine the claims. The claims of insured deposits should be settled within six (6) months of filing, provided all requirements have been met.
⌃How does the DIC establish the ownership of a deposit?
The DIC relies on the deposit records of the closed member institution, as well as the proof of ownership presented by depositors.
⌃What if a depositor loses his passbook or another negotiable document (a certificate of deposit, official cheque, etc.)?
The depositor will be required to file an affidavit to that effect, which will then be corroborated by the member institution’s records.
⌃Who should file a claim, if more than one person is authorized to draw on an account?
A claim must be filed by a person authorized to make withdrawals from the account. For example, a claim for deposit insurance on an account where either of two parties was authorized to sign for withdrawals may be made by either party. However, if two signatures were required to make withdrawals, both signatures will be required on the claim for deposit insurance.
⌃Does the Deposit Insurance Corporation deal directly with the depositor of failed member institutions?
Although the DIC is able to deal directly with depositors, it will usually utilize the services of a court appointed liquidator to verify claims and to prepare a claims’ list, which is then submitted to the DIC to facilitate payment directly to depositors.
⌃How is a depositor notified of the closing of a DIC member institution?
In the event that a member institution is closed, the Central Bank will advise the general public through the Official Gazette and request the Deposit Insurance Corporation (DIC) to step in and take appropriate action. Depositors will then need to make a claim on the Depositor Insurance Fund. Depositors may submit claims for deposit insurance up to one year after closure of the closed member institution.
⌃What happens if a depositor expects to be paid an amount that is different from what the DIC pays?
The DIC determines from the records of the member institution how much a depositor should be paid, based on the principal balance on account with the member institution, along with interest accrued up to the date of its closure. If this amount is not what the depositor expects to receive, the depositor must then provide proof to the DIC to substantiate his or her claim.
⌃Partnerships
How are partnerships treated?
For the purpose of deposit insurance compensation, partnerships are treated as a single account, and therefore insured separately from the personal accounts of the shareholders. To illustrate, let’s use the example of a partnership, of John, Jack and Mary, which has a deposit of $30,000 with a member institution and John who has a $20,000 account with the same institution. In the event of a payout, the partnership will be entitled to compensation of up to $50,000 as a single entity, and John is eligible for insurance up to $50,000 in his own personal capacity. There is no three-way split of the partnership account, or aggregation of the personal assets with that of the partnership.
⌃Are there any similar types of eligible business accounts?
Yes. Corporations and associations would also be treated similarly.
⌃Recovery of Uninsured Balances
Do I lose the uninsured portion of my deposits?
Not necessarily. Persons who have deposits in excess of the insured limit will be paid the insured portion of their deposits less any amounts owed to the institution by the depositor, and will be issued with a certificate for the amount in excess of the limit. This certificate is then presented to the liquidator who will make pro-rated payments to the depositor as and when the closed member’s assets are collected and sold and available for distribution
⌃How are depositors uninsured balances collected?
Amounts in excess of the $50,000 insurance cover can still be claimed upon the final liquidation of the remaining assets of the closed member institution.
⌃What is a DIC certificate?
The Deposit Insurance Corporation will issue certificates to cover the value of deposits in excess of the insured maximum of B$50,000 as well as other uninsured claims against the failed institution. These certificates will then serve as additional claims made against the assets of the institution and shall be paid, depending on the rate of recovery from the liquidation of the assets of the institution, and the extent and priority of claims from other creditors of the institution.
⌃What’s the role of the liquidator?
The liquidator is appointed when the court makes the winding up order and is obligated to collect all loans promptly and efficiently, along with the other assets of the closed member institution. He reports directly to the court.
⌃What is the liquidator’s dividend?
This is a payment made to depositors of a closed member in excess of the insured amount. Such payments are made from funds realized from the sale of the assets and the recovery of debts owed to the closed member.
⌃Sole Proprietorship Accounts
How are deposits held for sole proprietorship treated?
Firstly, sole proprietor accounts are regarded as single ownership accounts, which do not qualify for separate protection as they are distinct legal entities in their own rights. As such, deposits held in a depositors own name and under a sole proprietorship held with the same member institution will be aggregated and the maximum insurance cover of $50,000 applied. This is because they are held in the same right and capacity. Where a sole proprietorship is owned by a corporation, then the deposits of the sole proprietorship and the corporation will be aggregated in determining the extent of the insurance protection.
⌃Trust or Client Assets
How are trust or client assets treated?
Deposits held in trust or client accounts are insured separately from deposits individually owned by the trustee or the beneficiaries. However, all eligible deposits held for the same trustee and beneficiaries are combined and the total is insured up to the maximum of B$50,000.
⌃