The Deposit insurance in conjunction 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 the 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 the stability of financial system in the country, encourage savings, facilitate economic development and mitigate internal and external shocks through increasing public confidence in commercial banks.
Initially, when the system was launched, the coverage level was set at 5,000 GEL. As from July the 1st, 2020 the coverage level increased up to 15,000 GEL. Increasing the level up to 15,000 GEL is first important step toward improvement of coverage rate. At the same time it will strengthen overall credibility of the system and its role in financial safety net.
Meanwhile, from July the 1st, 2020 the rate for monthly regular insurance premiums of insured deposits in the national currency is reduced from 0.067% to 0.03%. The rate for insured deposits in FX remains unchanged at 0.1%.
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. In addition, the deposits of legal entities, commercial bank administrators and their family members, as well as the deposits of shareholders holding at least 5% or more of the bank’s capital and the deposits of their family members are excluded from insurance. Along with the development of the system, the work will start on inclusion of legal entities.
The introduction of the System does not imply additional costs for the depositors.
The Introduction of the System was envisaged under the Social - Economic Development Strategy - Georgia 2020 and the EU-Georgia Association Agreement.