Deposit Guarantee Scheme Bahamas

The Commonwealth of the Bahamas is considered one of the core international financial centers. The substantial size of the financial industry is out of balance in comparison with the local market. A solid legal structure defines the mode of operation for credit institutions that are likely to fail so as to avoid that the retail market and public finance is impacted by unforeseen and unexpected financial stress. This includes a special resolution framework for banks, statutory administration, bank deposit insurance and bank liquidation procedures. A distinction is made between local credit institutions and non-resident financial institutions. Both type of institutions may be registered in the Bahamas but hold a different risk profile. As a consequence, the Deposit Insurance Fund of the Bahamas only applies to member institutions and does not cover account deposits in other currency than Bahamian dollar.

An outline of  the Fund is discussed below, detailed information on the applicability of the fund is available under the tab Deposit Protection in the Bahamas.

Deposit Guarantee Scheme (Bahamas): The Protection of Depositors Act of the Bahamas established the Deposit Insurance Corporation (DIC) in 1999 as a public corporation. The corporation manages the Deposit Insurance Fund (DIF). Its duties include the collection of membership fees and contributions, and honoring repayment of insured account balances to insured account holders.

Secured Deposit Limit: 50.000 Bahamian dollar only. Other currencies are not covered by the Deposit Insurance Fund.

Claim Filing Procedure: The Central Bank of the Bahamas informs the DIC that a DIC member institution is insolvent or unable or likely to become unable to meet its obligations or is about to suspend payments. The DIC informs account holders via official announcement in national media and at the offices of the failed member. Account holders file their claim in person at the DIC or the appointed liquidator, or by affidavit. A claim form accompanied by a proof of identity and evidence of deposit ownership is submitted to the DIC.

Claim Submission Timeframe: Claims to the Deposit Insurance Fund must take place within 12 months of the activation of the scheme. Claims submitted after this deadline are not taken into consideration.

Repayment Timeframe: Verification of claims is dependent on the availability of data. Yet, the DIC settles approved claims as soon as possible within a maximum timeframe of 6 months after the closure of the member institution.

Repayment Conditions: Payments are made to the eligible account holder of an account balance held in Bahamian dollar at a DIC member institution. Repayment takes place by cheque or bank transfer to another local bank account held by the account holder at another DIC member.

Bahamas DIF Claim Eligibility: Bahamian dollar deposits held at DIC members are covered by the scheme. This includes checking, savings, demand and time accounts. Not included are commercial paper, subordinated debt, shares and holdings in foreign currency.

Rejections of a DIF Claim: DIF claims may be rejected because of claim ineligibility or by misunderstandings of the claim form. Administrative procedures allow for a reinspection within the applicable timeframes. The administrative court may refer the matter back to the DIC for reinspection. However, claim evidence must then be sufficient to allow the DIC to overturn its earlier decision.

DIF Membership and Contributions: Licensed and supervised deposit taking financial institutions and registered credit unions who transact in Bahamian dollars must participate in the DIC. Member institutions pay premiums to substantiate the fund and cover potential losses of one of the other members.

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