Facts and Common Misconceptions surrounding deposit insurance in T&T
Misconception: The Deposit Insurance Corporation (DIC) is empowered to close a member institution.
Fact: A member institution licensed under the Financial Institutions Act, 2008 can only be “closed by or with the approval of The Central Bank of Trinidad and Tobago as a result of financial difficulties.”
Misconception: All financial institutions that take deposits are covered under the Deposit Insurance Fund.
Fact: ONLY member institutions that are licensed under the Financial Institutions Act, 2008 are covered under the Deposit Insurance Fund. This legislation provides for the regulation of commercial banks and other institutions engaged in the business of banking and business of a financial nature.
Fact: ONLY Savings Accounts (including interest), Current Accounts (including interest) and Fixed Deposit Accounts (including interest), inclusive of any outstanding balances due (uncleared deposits) to these accounts, are considered for deposit insurance coverage.
Fact: Deposits held by the same person in the same member institution in the form of CD’s, Chequing and Savings accounts are added together and insured up to a maximum of TT$125,000.
Fact: All joint accounts with the same names, notwithstanding alterations to the sequence of names, are added together and insured up to a maximum of TT$125,000.
Fact: The interests held by beneficiaries established under an irrevocable express trust account are insured separately up to the maximum TT$125,000 prescribed limit. Additionally, interests in accounts held by the Settlor, Trustee or Administrator of an irrevocable trust account are insured separately from the interests of the beneficiaries named under an irrevocable express trust account.
Fact: Mutual funds, be they general or issued as a member’s proprietary funds, are NOT covered by deposit insurance.
Fact: Deposit insurance is ONLY activated upon closure of a member institution.
Fact: The legislation governing the operations of the Deposit Insurance system provides for payout to commence within 3 months of the closure of a member institution.
Fact: A claim, supported by appropriate proof, must be made to the Deposit Insurance Corporation before payment of deposit insurance can be made. As such, all information including certificates, deposit books bank statements etc. would be required to facilitate a smooth payout process. See Tips for Depositors.
Fact: Depositors are granted a 12 month window in which to make a claim after which they can claim against the estate of the failed member. After the passage of 12 months, claims can only be made against the estate of the failed member institution payment for which would depend on the values realised from disposal of the assets.
Fact: A liquidator’s certificate is issued to the depositor by the Corporation for the unsecured balance being that portion of the deposit over TT$125,000. If, the realizations from the disposal of assets net of the subrogated claim of the deposit insurer results in a surplus, then unsecured balances would be paid on a pro rata basis.