966
Republic of Azerbaijan Law on Deposit Insurance
This Law defines the principles of creation and operation of the collective mandatory insurance system for individual deposits with banks operating in the Republic of Azerbaijan as well as the deposit compensation procedures
Chapter I
General provisions
Article 1. Purpose of creating the Deposit Insurance Scheme
The purpose of establishing the Deposit Insurance Scheme is to prevent the risk of losing money deposited by individuals and to ensure the sustainability and development of the financial and banking system whenever banks and local branch offices of foreign banks become insolvent.
Article 2. Main definitions
2.1. Terms used herein shall have the following meanings:
2.1.1. deposit — funds accepted by the bank in the national and foreign currencies that are returnable, along with the interest accrued, under the applicable laws or contract;
2.1.2. protected deposit — the deposit compensated by the Deposit Insurance Fund (hereinafter referred to as the Fund) to the depositor when an insurance event occurs. The following deposits are not protected:
2.1.2.1. proceeds from sale of unregistered debt securities (unregistered certificates of deposit);
2.1.2.2. deposits accepted by the bank’s offices outside the Republic of Azerbaijan;
2.1.2.3. deposits as defined by the applicable laws in connection with suspicious transactions involving laundering of illegal revenues and terrorism financing;
2.1.2.4. deposits originated as a result of a committed crime, as confirmed by an effective court order;
2.1.2.5. attached deposits;
2.1.2.6. deposits received at an annual interest rate of over limit defined pursuant to the Article 8.1.20 of this Law (hereinafter referred to as the Central Bank), current on the date of receipt;
2.1.2.7. money in bank accounts opened by individuals for business purposes;
2.1.2.8. individuals’ money managed by a bank on trust basis;
2.1.2.9. regardless of whether the maturity expired or not, a deposit equal to the principal of, and interest on the depositor’s debt to the bank;
2.1.2.10. deposits securing obligations to the bank.
2.1.3. Insured deposit— a portion of a protected depositor’s protected deposit that is compensated by the Fund.
2.1.4. Depositor—an individual who has a deposit with a bank as well as a person entitled, by law or contract, to dispose of the deposit.
2.1.5. Protected depositor— an individual, other than those described below, who has a bank deposit:
2.1.5.1. members of the bank’s Supervisory Board, Audit Committee, Managing Board and their immediate family (spouse, parents and children, including adopted children, brothers and sisters);
2.1.5.2. persons who hold 10 per cent or more of the bank’s voting shares and their immediate family (spouse, parents and children, including adopted children, brothers and sisters);
2.1.5.3. external auditors who audited the bank in the calendar year preceding the date the payment of compensation was first announced.
2.1.6. Member bank—a bank or a local branch office of a foreign bank obligated to pay insurance fees to the Fund in accordance herewith.
2.1.7. Joint deposit account—a bank account owned by one or more individuals and disposable with the signature of one or several of them.
2.1.8. Insurance fees—membership, calendar and supplementary fees paid by members banks to the Fund in accordance herewith.
2.1.9. Insurance event— the Central Bank’s approval of a member bank’s forced liquidation or bankruptcy or effect of a court judgment prohibiting performance of deposit liabilities under the law and the bank’s failure/inability to perform its statutory or contractual obligations to depositors.
2.1.10. Day of insurance event – the date stated in the notice dispatched by the Central Bank to the Fund hereunder as the day of occurrence of the insurance event.
2.1.11. Compensation – funds paid to the protected depositor in case of an insurance event.
Chapter II
Deposit Insurance Fund
Article 3. Legal status of the Deposit Insurance Fund
3.1. This Law establishes the Deposit Insurance Fund for deposit insurance purposes.
3.2. The Fund’s insurance reserves shall be formed from sources defined in Article 11 hereof.
3.3. The Fund is a non-profit legal entity and owns its property and assets. It shall have a seal with its name embossed thereupon as well as accounts with the Central Bank and other banks as defined herein. The Fund’s primary goal is not to generate profits and all income that its operations will generate will be used to replenish insurance reserves.
3.4. The state and the Central Bank shall not be responsible for the Fund’s obligations and the Fund shall not be responsible for the state’s and the Central Bank’s obligations.
3.5. The Fund shall operate in compliance with the Constitution of the Republic of
Azerbaijan, this Law, other laws of the Republic of Azerbaijan and the Fund’s regulations and policies. The Fund’s regulations shall be enacted by the authorized/competent management body defined herein and shall apply to all member banks. Provisions of the existing insurance laws shall not apply to the Fund; the Fund’s operations shall not require a special permit (license).
3.6. All banks and local branch offices of foreign banks licensed to take individual deposits shall be members of the Fund. Deposits with foreign branch offices of member banks shall not be insured by the Fund and shall not be eligible for compensation.
3.7. If the deposit insurance scheme of a foreign bank’s country of origin covers its branch office(s) operating in the Republic of Azerbaijan, the Fund shall not insure the deposits with the local branch office of the foreign bank, provided that the deposit insurance scheme of that country is not less favorable than the one defined hereunder. Otherwise, deposits with the local branch office of the foreign bank shall be subject to additional insurance in accordance herewith.
3.8. The Fund shall enjoy tax benefits as defined in the Tax Code of the Republic of Azerbaijan with respect to its income and the member banks shall enjoy such benefits with respect to the insurance fees payable to the Fund.
3.9. The Fund shall be located in the city of Baku.
Article 4. Functions of the Fund
4.1. The Fund shall discharge the following functions:
4.1.1. draw up a registry of member banks and issue certificates to member banks;
4.1.2. collect, and keep record of insurance fees;
4.1.3. manage and dispose of its assets;
4.1.4. keep track of depositor claims and pay compensations, in case of an insurance event;
4.1.5. receive from member banks information and reports necessary for the Fund’s operations, as defined herein (including deposit policies);
4.1.6. pass the Fund’s regulations, in compliance herewith;
4.1.7. borrow funds from financial markets, Central Bank or the government of Azerbaijan if short of money to finance its obligations;
4.1.8. when compensating a claim, recourse the amount from the relevant member bank;
4.1.9. demand member banks to pay insurance fee arrears and fines assessed thereupon and inform the Central Bank thereof;
4.1.10. discharge any other functions necessary to sustain the operations of the individual deposit insurance scheme.
Article 5. Management bodies of the Fund
The Fund shall be managed by the supreme management body, the Board of Custodians, and the executive organ, the Executive Director.
Article 6. Board of Custodians of the Fund
6.1. The Fund’s Board of Custodians shall consist of seven members.
6.2. The Board of Custodians shall include three representatives of the Central Bank, two representatives from relevant executive authorities and two representatives of the member banking community as recommended by member banks.
6.3. Members representing member banks shall be selected by a simple majority vote at a meeting convened by the Central Bank with the presence of over a half of the member banks. Member banks shall be notified of such a convention 15 days in advance.
6.4. Substitute members are identified that may replace a member of the Board of Custodians in accordance with Articles 6.2 and 6.3 above. Such substitute members shall replace the original members of the Board of Custodians in meetings whenever the latter are unable to attend.
6.5. Persons who have higher economic or legal education and at least two years of financial and banking experience and do not have any track record of conviction for crimes against property, economic crimes, crimes against interests of service as well as grave and especially grave crimes are eligible to become members of the Board of Custodians.
6.6. Members of the Board of Custodians shall have a term of office of five years and may be re-appointed for another term.
6.7. Board of Custodians shall be directed by a chairperson. Chairperson and deputy chairperson of the Board of Custodians shall be appointed from among the members of the Board of Custodians at the Central Bank’s presentation. The deputy chairperson shall act as the Board Chairperson whenever the latter is unavailable.
6.8. Members of the Board of Custodians shall not be remunerated for their role in the management of the Fund.
6.9. Term of office of a member of the Board of Custodians may be terminated if any of the following applies:
6.9.1. a letter of resignation has been filed;
6.9.2. the term of office expires;
6.9.3. the member is revoked;
6.9.4. a relevant effective court order exists;
6.9.5. the member is dismissed from the institution that nominated him;
6.9.6. the bank that this member represents is expelled from the Fund.
6.10. If the term of office of a member of the Board of Custodians is terminated before expiry, the term of office of the replacement member shall expire upon the completion of the term of office of the replaced member.
Article 7. Meetings of the Board of Custodians
7.1. Board of Custodians shall hold scheduled and extraordinary meetings. Scheduled meetings shall be held not less than once a quarter, while extraordinary meetings may be convened by the board chairperson, at least two members of the board or the executive director. Members of the Board of Custodians shall receive a written notice of a meeting at least 3 days in advance.
7.2. Extraordinary Board meetings shall be held if any of the following applies:
7.2.1. a written notice from the Central Bank is received that reports an insurance event at a member bank;
7.2.2. a written notice from the Central Bank is received that reports the possibility of an insurance event at one or several banks;
7.2.3. borrowing is needed;
7.2.4. the state in which the Fund’s resources are invested officially declares its inability to honor its obligations;
7.2.5. other emergencies.
7.3. A meeting of the Fund’s Board of Custodians shall be deemed plenipotentiary in the presence of five members.
7.4. Decisions of the Fund’s Board of Custodians shall be adopted by a simple majority vote of the members present in the meeting. In case of a tie, the board chairperson shall cast the final vote and none may abstain in this case.
7.5. Experts may be invited to participate in meetings of the Fund’s Board of Custodians as advisory voters.
7.6. Protocols of decisions of the Fund’s Board of Custodians shall be drawn up. Protocols shall be signed by the meeting chair and secretary.
Article 8. Authorities of the Board of Custodians
8.1. The Fund’s Board of Custodians:
8.1.1. shall approve the Fund’s organizational structure;
8.1.2. shall approve the Fund’s annual budget and amendments thereto;
8.1.3. shall approve the forms and amounts of the Fund’s personnel remuneration;
8.1.4. shall approve the Fund’s regulations;
8.1.5. shall decide whether to pay compensations as well as whether to extend the period of payment of compensation in accordance herewith;
8.1.6. shall identify the mass media outlets for announcing and publishing information about the Fund’s operations as well as payment of compensations;
8.1.7. shall decide whether to borrow;
8.1.8. shall have the decision-making authority with respect to payment of supplementary fees payable by member banks;
8.1.9. shall approve the amount and payment procedures for insurance fees payable by the local branch offices of foreign banks in accordance with Article 3.7 hereof;
8.1.10. shall determine the ways, areas and procedures of investing the Fund’s resources;
8.1.11. shall approve the Fund’s performance reporting procedures;
8.1.12. shall define the operating principles of the Fund’s Internal Audit Function;
8.1.13. shall appoint the Fund’s external auditor and approve the audit findings;
8.1.14. shall hear and approve the report of the Fund’s executive director;
8.1.15. shall review complaints related to the performance of the Fund’s executive director and personnel;
8.1.16. shall decide whether to issue long-term debt securities of the Fund;
8.1.17. shall review the Central Bank’s recommendation to appoint an administrator or receiver of a member bank and, if such recommendation is accepted, shall nominate persons to represent the Fund;
8.1.18. shall select an agent bank to pay compensations;
8.1.19. shall recommend improvements for the individual deposit insurance scheme;
8.1.20. defines the maximum limit of the annual interest rate for the protected deposits by the upon consent of the Central Bank;
8.1.21. shall handle other issues within the scope of competence of the Fund and its Board of Custodians as defined herein.
8.2. Board of Custodians may address issues related to the Fund’s operations that are outside the scope of competence of the Fund’s executive director.
8.3. Board of Custodians may not delegate the authorities set out in the first paragraph hereof to the Fund’s executive director.
Article 9. Executive Director of the Fund
9.1. The Fund’s executive director and his deputy (deputies) shall be appointed and dismissed by the Board of Custodians. The executive director and his deputy (deputies) shall have a term of office of five years and may be re-appointed for another term.
9.2. Citizens of the Republic of Azerbaijan who have a higher economic or legal education and at least five years of relevant professional experience and no track record of conviction
for crimes against property, economic crimes, against service interests as well as grave and especially grave crimes are eligible to become the Fund’s executive director.
Article 10. Authorities of the Executive Director
10.1. The Fund’s executive director:
10.1.1. shall ensure implementation of decisions issued by the Fund’s Board of Custodians and manage the Fund’s everyday activities;
10.1.2. shall represent the Fund in dealings with other persons, both domestically and abroad, without a power of attorney;
10.1.3. shall draft and submit for the Board of Custodians’ approval the Fund’s budget;
10.1.4. shall make sure that scheduled and extraordinary meetings of the Fund’s Board of Custodians are convened;
10.1.5. shall appoint and dismiss the Fund’s staff members and shall apply incentive and enforcement measures with respect to the Fund’s personnel;
10.1.6. shall develop and submit to the Board of Custodians recommendations with respect to management of the Fund’s insurance reserves;
10.1.7. shall develop and submit to the Board of Custodians quarterly and annual performance reports;
10.1.8. shall recommend to the Board of Custodians external auditing and auditors for the Fund;
10.1.9. shall draft and submit to the Board of Custodians recommendations for expelling a bank from the Fund based on the Central Bank’s written notice;
10.1.10. shall inform the Board of Custodians of any shortage or possible shortage of funds to pay compensations;
10.1.11. shall draft and submit for the Board of Custodians’ approval the Fund’s regulations;
10.1.12. shall draft and submit for the Board of Custodians’ approval the forms and submission procedures for reports presented by member banks to the Fund;
10.1.13. shall inform the Central Bank of member banks that breached this law, Fund’s regulations or decisions issued by the Fund’s Board of Custodians;
10.1.14. shall participate in the meetings of the Fund’s Board of Custodians as an advisory voter;
10.1.15. shall discharge other authorities as may be assigned to him by the Fund’s Board of Custodians.
10.2. Term of office of the executive director may be terminated if any of the following applies:
10.2.1. he filed a letter of resignation;
10.2.2. a relevant effective court order exists;
10.2.3. the term of office expired;
10.2.4. other cases as defined by the existing laws.
Article 11. Insurance reserves of the Fund
11.1. The Fund’s insurance reserves shall be formed from the following sources:
11.1.1. membership fees paid by member banks;
11.1.2. calendar fees paid by member banks;
11.1.3. supplementary fees paid by member banks;
11.1.4. proceeds from long-term debt obligations issued by the Fund;
11.1.5. fines paid by member banks;
11.1.6. proceeds from management of the Fund’s resources, less current costs;
11.1.7. grant money, donations and funds from other sources not prohibited by the law;
11.1.8. funds borrowed to cover the shortfall of compensation money;
11.1.9. funds borrowed from a bank or a local branch office of a foreign bank with a recourse.
Article 12. Membership fees of member banks
12.1. Member banks shall, within 10 calendar days from being recorded in the Fund’s registry, transfer a one-time/lump-sum membership fee of 10 (ten) thousand manat to the Fund’s account with the Central Bank.
12.2. Member banks that are merged or consolidated or that have their right to take individual deposits reinstated by the Central Bank shall acquire the rights and duties of member banks as defined herein without having to pay the membership fee.
Article 13. Calendar fees of member banks
13.1. Banks shall pay calendar fees from the date of record in the Fund’s registry of member banks through the date of revocation of their banking license.
13.2. If the Central Bank suspends a member bank’s right to take deposits, the bank shall pay calendar fees to the Fund up until all of its liabilities with respect to protected deposits are performed in full.
13.3. The first reporting period for assessing calendar fees shall commence on the first and end on the last day of the quarter in which the bank is recorded in the Fund’s registry of member banks.
13.4. Calendar fees shall be payable at the rate of 0.15 per cent of the quarterly average daily balance of protected deposits in the first year and at 0.125 per cent in the subsequent years, starting from the day of record in the Fund’s registry of member banks.
13.5. Calendar fees shall be transferred to the Fund’s accounts with the Central Bank within 10 calendar days from the end of each quarter.
13.6. Calendar fees shall be paid in the currency of deposits. If deposits are not in USD or Euro, calendar fees shall be calculated and paid in one of these currencies based on cross exchange rates set on the basis of the Central Bank’s official exchange rates for relevant currencies.
13.7. If the Fund’s insurance reserves reach up to 5 per cent of protected deposits, the Board of Custodians may decide to reduce the calendar fees paid by member banks or to suspend the payment of calendar fees.
Article 14. Supplementary fees of member banks
14.1. If the Fund borrows money to pay compensations, member banks shall pay supplementary fees in addition to calendar fees until the Fund fully performs its obligations. Supplementary fees shall be calculated and paid depending on the amount and repayment terms of the Fund’s borrowings but not to exceed 0.2 per cent of the quarterly average daily balance of protected deposits.
14.2. Board of Custodians shall approve the procedures for calculating and paying supplementary fees.
14.3. If the Central Bank suspends a member bank’s right to take deposits, the bank shall pay supplementary fees to the Fund until its obligations to depositors are performed in full.
Article 15. Enforcement of insurance fees
15.1. Any member bank that has failed to pay insurance fees on time or in full shall pay a fine (penalty) to the Fund.
15.2. Fines shall be assessed by multiplying the insurance fees paid by the member bank in question during the previous reporting period by the Central Bank’s interest rate, for each day of delay of insurance fees.
15.3. If insurance fees and fines are not paid in 30 days, fines shall cease to assess and the Fund shall take actions necessary to withhold such funds from the member bank’s correspondent accounts in accordance with the existing laws.
Article 16. Uses of insurance reserves of the Fund
16.1. The Fund’s insurance reserves may be used for the following purposes:
16.1.1. to pay compensations;
16.1.2. to support management of the Fund and acquire property, within the scope of the annual budget;
16.1.3. to pay debt obligations.
Article 17. Borrowing
If the Fund’s total liquid (cashable) assets fall or are likely to fall below 1 (one) million manats due to compensatory pay-offs, the Board of Custodians may choose to have the Fund borrow required resources.
Article 18. Management of insurance reserves of the Fund
18.1. For purposes of distributing (diversifying) risks as well as to ensure security, sufficient liquidity of, and reasonable return on assets, the Fund shall invest its available resources only in the following financial instruments:
18.1.1. government securities;
18.1.2. securities issued by central banks;
18.1.3. deposits with central banks and other highly rated banks as well as other highly rated financial instruments.
Article 19. Accounting and reporting of the Fund
19.1. The Fund shall maintain its accounts and records in accordance with the existing laws.
19.2. The Fund’s reporting year shall last from January 1 through December 31 of a calendar year.
19.3. The Fund’s annual report shall be drawn up by the 1st of March of the following year and shall be reviewed and approved by the Board of Custodians within a period of one month.
19.4. The Fund shall present its annual report and audit report to the President of the Republic of Azerbaijan, Central Bank and institutions represented in the Board of Custodians.
19.5. The annual report shall include: 19.5.1. the Fund’s annual accounting balance sheet;
19.5.2. report on income (losses) from management of the Fund’s assets;
19.5.3. the Fund’s cash flow statement;
19.5.4. registry of member banks.
19.6. The authenticity and accuracy of the Fund’s annual balance sheet statement, cash flow statement and statement of income (losses) from management of the Fund’s assets shall be verified and ascertained by the external auditor.
Article 20. Supervision of the Fund
20.1. The Fund’s Board of Custodians shall be responsible for overall supervision of the Fund’s operations.
20.2. The Fund’s annual financial operations shall be inspected by an external auditor appointed by the Board of Custodians. If necessary, the Board of Custodians may appoint an extraordinary external audit.
20.3. The Internal Audit Function reporting to the Board of Custodians shall be responsible for conducting internal audits of the Fund. Internal Audit staff shall be appointed upon recommendation of the Fund’s Board of Custodians.
Article 21. Interactions of the Fund with the Central Bank and state authorities
21.1. When discharging its functions the Fund:
21.1.1. shall report the amount of protected deposits in each member bank to the Central Bank;
21.1.2. shall inform the Central Bank of any known failures by member banks to comply with this Law, the Fund’s regulations and directives of the Board of Custodians as well as to perform deposit-related obligations in compliance with the law or contract.
21.2. The Fund shall, upon the request of state authorities represented in the Board of Custodians, and the Central Bank, furnish them with information about its operations that they may request.
21.3. If one or several member banks face are likely to experience an insurance event the Central Bank shall so inform the Fund.
21.4. No later than the business day following the date upon which any of the below listed decisions is made in relation to a bank or banks, the Central Bank shall inform the Fund of the following:
21.4.1. issuance of a banking license;
21.4.2. reorganization of the bank;
21.4.3. receivership of a member bank;
21.4.4. suspension of a member bank’s right to take individual deposits;
21.4.5. moratorium on a member bank’s payment of liabilities;
21.4.6. failure/inability of a member bank under forced liquidation or bankrupt member bank to perform its statutory or contractual deposit-related liabilities.
21.5. As the supervisor of member banks, the Central Bank shall examine their practices and status of assessment of insurance fees paid to the Fund and consolidated accounting of depositors. If the Central Bank identifies that any member bank failed to perform its obligations to the Fund as defined hereunder, it shall instruct the faulty bank to remove such identified incompliance and pay improperly assessed insurance fees, and shall inform the Fund.
21.6. Penalties defined in the Code of Administrative Penalties of the Republic of Azerbaijan shall be applied against administrators of member banks that failed to remove the deficiencies and transfer the deficient amount of insurance fees to the Fund’s accounts within the timeframe set by the Central Bank. If such breaches are repeated within 1 year the Central Bank shall suspend the member bank’s right to take individual deposits.
Article 22. Relations between the Fund and member banks
22.1. When discharging its functions the Fund:
22.1.1. shall receive from member banks summary reports on deposits as defined by the Fund’s regulations;
22.1.2. whenever an obligation to pay compensations originates, shall require member banks to present documents that ascertain protected deposits;
22.1.3. shall inform the concerned bank of payment of compensations.
22.2. A member bank:
22.2.1. shall comply with the requirements set forth by the Fund discharging its authorities granted to it hereunder;
22.2.2. shall submit summary reports on deposits in the format and manner as required by the Fund;
22.2.3. shall immediately notify the Fund of any conditions that render the bank incapable of performing statutory or contractual obligations with respect to individual deposits;
22.2.4. shall maintain consolidated/summary records of obligations to each depositor at the bank as well as its branch offices and divisions, as prescribed by the Fund’s Board of Custodians, and, in case of an insurance event, shall approve and submit to the Fund information about each depositor within no later than 3 business days.
22.3. The Fund shall remove a member bank from the registry and terminate its certificate if any of the following applies:
22.3.1. the banking license is revoked;
22.3.2. the Central Bank suspended the bank’s right to take individual deposits and the bank has fully performed its obligations to its depositors.
22.4. If a bank is expelled from the Fund, the Fund shall publicize such expulsion through mass media and notify the bank in question and the Central Bank in writing no later than in 2 business days.
22.5. If a bank is expelled from the Fund, it shall not be entitled to receive back the insurance fees it had previously paid to the Fund.
22.6. Insurance fees shall be assessed independently by member banks.
22.7. Any excess insurance fees and fines paid by member banks to the Fund shall be
carried over/posted to the next reporting period or returned to the member banks within 3 business days, as may be agreed with the banks in question.
Article 23. Liability of the Fund
23.1. The Fund shall be liable with all of its property and assets for obligations defined hereunder.
23.2. Executive officers and staff members of the Fund shall keep confidential any operational and transactional information about member banks as well as any other data and information that they may come in possession of through their professional activity both during employment with the Fund and after termination thereof. Executive officers and staff members of the Fund shall be held liable in accordance with the existing laws of the Republic of Azerbaijan for illegal disclosure of such information.
23.3. The Fund and its staff members shall be liable in accordance with the existing laws for failure to perform functions and authorities assigned to them hereunder.
Article 24. Liquidation of the Fund
The Fund shall be liquidated under a special law, which defines the procedures for liquidation and uses of its property and assets.
Chapter III
Relations of depositors with the Fund and member banks. Payment of compensation
Article 25. Rights of depositors
25.1. Depositors shall have the following rights:
25.1.1. to inquire, in writing or verbally, and obtain from the bank written information about the terms and conditions of the Fund membership, deposit insurance and payment of compensation;
25.1.2. to inquire, in writing or verbally, and obtain from the Fund written responses on whether the bank in question is a member of the Fund, terms and conditions of deposit insurance, compensation conditions and procedures;
25.1.3. to inform the Fund of a member bank’s failure to perform its statutory or contractual obligations on deposits;
25.1.4. to receive compensation for deposits in accordance with this Law.
25.2. A protected depositor may claim from the bank in question the difference between the compensation received from the Fund and his original deposit, in accordance with the existing laws.
Article 26. Compensations
The Fund shall compensate insured deposits at each member bank to the 100 per cent of the deposit balance but not to exceed 30 (thirty) thousand manats.
Article 27. Payment of compensation
27.1. National currency-denominated deposits shall be compensated in the national currency and foreign exchange-denominated deposits in the deposit currency. If deposits are not USD or Euro-denominated, compensation shall be calculated and paid in one of these currencies based on cross exchange rates set on the basis of the Central Bank’s official exchange rates for relevant currencies.
27.2. Interest on deposits shall be paid in the amount accrued by the date of the insurance event, provided that the compensation does not exceed the amount outlined in Article 26.1 hereof.
27.3. If a depositor holds several deposits with a bank, including local branch offices and divisions of the bank, or holds deposits in both national and foreign currencies, such deposits shall be summed up and treated as a single deposit for purposes of compensation.
27.4. If an insurance event takes place at several member banks where a depositor holds deposits, compensation shall be paid individually for deposits with each bank.
27.5. Deposits in a joint deposit account with a bank shall be treated a single deposit and the compensation shall be paid to the deposit account holders in equal portions or proportions as may be agreed among them, but not to exceed the amount outlined in Article
26.1 hereof.
27.6. If a joint deposit account holder has another deposit with the same bank, his share of the joint deposit and the other deposit shall be summed up and treated as a single deposit for compensation purposes.
27.7. If a parent or adopter has the statutory right of disposal of an deposit account in the name of a child under 18 years of age, the compensation shall be paid to that parent or adopter. If the parent or adopted has a deposit with the same bank, a separate compensation shall be paid on that deposit.
27.8. If a custodian or guardian has the statutory right or a third person has the contractual right to dispose of the deposit, such person shall be entitled to receive the compensation. If the custodian or guardian has a deposit with the same bank, a separate compensation shall be paid on that deposit.
27.9. Each deposit of a depositor with a bank established as a result of a merger or consolidation of member banks shall be treated as a separate deposit and eligible for separate compensation until the expiry of the deposit agreement.
27.10. Deposits not matured on the date of the first publication of the compensation announcement shall be deemed matured.
27.11. The Fund shall refuse to pay compensation or demand return of any amounts paid to persons who have filed erroneous or false information in order to obtain compensation or illegitimate claims for compensation. If the person fails to fulfill such demand the Fund shall take appropriate measures in accordance with the existing laws.
27.12. For purposes of payment of compensation, the Fund shall, on its own behalf and at its own expense, enter into agency agreements with banks.
27.13. No compensation shall be payable on deposits received after the member bank’s banking license is revoked or right to take individual deposits is suspended by the Central Bank.
Article 28. Compensation requests
28.1. The Fund shall, within 7 calendar days from the receipt of an insurance event notice from the Central Bank, announce in the mass media and publish a notification of the place and time of payment of compensations. The Fund shall make that announcement and publish the notification two more times at a week’s interval.
28.2. Depositors shall apply to the Fund for compensation in writing. The application shall be accompanied with the deposit agreement, deposit book or other documents ascertaining the deposit in accordance with the existing laws and copies thereof as well as the depositor’s identification card. If a depositor’s assignee applies for compensation, he must also furnish the Fund with a notarized power of attorney. The Fund’s Board of Custodians shall be responsible for determining the procedures for reviewing and authorizing payment of documents submitted.
28.3. The Fund shall accept depositor applications during one year from the date the payment of compensations was first announced.
28.4. When documents are made available that ascertain the existence of conditions that rendered the depositor incapable of filing an application, the period specified in Article
28.3 above may be extended upon the depositor’s request. Notwithstanding the foregoing, the depositor shall at any rate retain the entitlement to compensation during five years from the date the Fund first announced the payment of compensation.
28.5. The Fund shall pay compensation no later than in 90 calendar days from the date the depositor’s application was received. In exceptional cases, the Fund may prolong the period of payment of compensation for up to 90 calendar days, if so decided by the Board of Custodians.
Chapter IV
Final provisions
Article 29. Admission to the Fund
29.1. Banks, as well as local branch offices of foreign banks, except as otherwise provided in Article 3.7 hereof, which are licensed to take individual deposits and meet the minimum total capital requirements, capital adequacy ratios and honor their obligations as of the effective date hereof shall be admitted to the Fund based on the Central Bank’s official presentation on the business day following the day of receipt of such presentation.
29.2. Banks as well as local branch offices of foreign banks, except as otherwise provided in Article 3.7 hereof, licensed and authorized to take individual deposits after the effective date hereof, shall be admitted to the Fund based on the Central Bank’s official presentation in accordance with Article 29.1 above.
29.3. Banks and local branch offices of foreign banks shall acquire a member bank status when recorded in the Fund’s registry and issued a certificate.
Article 30. Public information
30.1. The Fund shall advertise through the mass media the registry of member banks in the first month of each calendar year, and shall announce any changes in the registry in mass media no later than the business day following the day such changes were made, and publish a relevant notification no later than in 3 business days.
30.2. When the Central Bank suspends a member bank’s right to take individual deposits, it shall publicize such suspension through the mass media no later than the business day following the day such decision was made and publish a relevant notification no later than in 3 business days.
30.3. A member bank:
30.3.1. shall incorporate the conditions of payment of insurance fees and compensations on the deposit received and information about mass media outlets in which announcements are made and notifications are published in relation to the Fund’s operations in the bank deposit or bank account agreement. These details must be stated in a format understandable for the individual;
30.3.2. shall install in the places where depositors are served inside its office building information about membership with the Fund and terms and conditions of deposit insurance and payment of compensations;
30.3.3. shall provide depositors, at their written or verbal requests, with information about its membership with the insurance scheme, protected deposits and compensations.
30.4. When publicizing its audited annual statement the bank shall indicate its membership with the Fund.
Article 31. Settlement of disputes
31.1. Depositors may apply to the Fund’s Board of Custodians and/or the court to settle any disputes arising in connection with payment of compensations.
31.2. The Fund’s Board of Custodians must address any disputes arising between the Fund and member banks. Any party unsatisfied with the results of such settlement may appeal to the court in accordance with the existing laws.
Article 32. Effect of the Law This Law shall take effect upon the publication date.
Articles 13, 14 and Chapter III hereof shall take effect 6 months after the effective date hereof.
President of the Republic of Azerbaijan
Ilham ALIYEV
Baku, December 29, 2006