Deposit insurance system together with the prudential regulation, liquidity support and effective supervision represents an important component of financial stability and safety and protects depositors from incurring losses (within the set limit) in the event of commencement of liquidation, insolvency or bankruptcy proceedings in any of the commercial banks (according to the Law of Georgia on Activities of Commercial Bank). The purpose of implementing this system in Georgia is to support stability of financial system in the country, encourage savings, facilitate economic development and mitigate internal and external shocks through raising public confidence in commercial banks.
Currently the insurance limit is GEL 5,000 for deposits placed in any currency. This limit, set with consideration of local economic situation and international practice, will be revisited gradually and increased.
All types of deposits of resident and non-resident individuals, including current accounts and deposits are insured. Insurance does not apply to deposits of those individuals whose right to access the deposit is restricted according to the Georgian legislation. Also, deposits of legal entities, commercial bank administrators and their family members, as well as deposits of shareholders holding at least 5% or more of the bank’s capital and deposits of their family members are excluded from insurance. Along with development of the system, the work will start on inclusion of legal entities.
The system introduction does not imply additional costs for the depositors.
For the purpose of operating deposit insurance system, all commercial banks of Georgia pay insurance premium- monthly regular contribution, which equals 0.067 % of total insured GEL deposits and 0.1% of total FX insured deposits. These contributions are directed to the Deposit Insurance Fund.
Introduction of the System was envisaged under the Social - Economic Development Strategy - Georgia 2020 and the Association Agreement with the European Union.