Kazakhstan Deposit Insurance Fund Clarifies Guarantee Amounts and Enhances Depositor Notification Procedures

In accordance with legal requirements, second-tier banks are obligated to inform their clients about their participation in the deposit guarantee system. When establishing a bank account or deposit agreement, banks must also provide notification on the terms and procedures for guarantee payments, using the form established by the Kazakhstan Deposit Insurance Fund (KDIF).

The wide array of deposit products on the market can often lead to confusion among depositors regarding the key terms that determine the deposit type and its corresponding guarantee amount, which is payable in the event of a bank’s license revocation.

To address this, at the initiative of the KDIF and in an effort to protect depositors’ interests and enhance public financial literacy, the Fund has collaborated with banks to significantly improve the client notification process.

Effective July 1, 2023, the KDIF notification form provided by banks upon signing a bank account/deposit agreement includes details on the specifics of calculating reimbursement amounts in several key scenarios:

• Holding multiple deposits at a single bank;
• Holding deposits in a foreign currency;
• The offset of any outstanding debt you may have with the bank (if you are also a borrower from that bank).

This information is provided to the depositor regardless of the method used to enter into the agreement—whether online via the bank’s website, through its mobile application, or in person at a branch. Some banks also include these details in the general terms and conditions on their websites.

Furthermore, the updated notification form contains a reference to a separate document (signed during the agreement process), which mandatorily displays key information about the specific banking product: its type, currency, conditions for full or partial early withdrawal, and the maximum guarantee amount.

For example, if a client opens a term deposit in tenge at a bank branch, the application or other document signed at the time of the agreement will specify that the deposit:

• Is a term deposit;
• Is denominated in tenge;
• Allows for early withdrawal within 7 days of the depositor’s request;
• Is covered by the KDIF guarantee up to a limit of 10 million tenge.

If such a deposit is opened in a foreign currency, the document will state, in addition to the type, currency, and withdrawal conditions, a maximum guarantee amount of 5 million tenge.

In the case of opening a savings deposit in tenge, for instance, the bank will notify that the maximum guarantee amount is 20 million tenge.

This information applies to all products offered by member banks of the deposit guarantee system to individuals and sole proprietors. This includes not only deposits but also funds held in current accounts and on payment cards in both tenge and foreign currency.

As a result of this joint effort between the Fund and the banks, depositors now have access to all essential information regarding their bank account/deposit and its guarantee mechanism before signing the agreement. A careful review of this information will help depositors understand the extent of KDIF’s coverage on their funds and, if guarantee limits are exceeded, to diversify their funds in a timely manner by placing them across several banks within the maximum limits established by law.

Currently, 13 second-tier banks have implemented this functionality (with the exception of Citibank Kazakhstan, which does not serve retail clients), and 5 banks are in the final stages of implementation.

We remind you that deposits of Kazakhstani account holders are automatically protected by the KDIF from the moment a bank deposit and/or bank account agreement is concluded with a member bank of the deposit guarantee system (which includes all Kazakhstani banks that accept deposits and open/maintain bank accounts for individuals, with the exception of Islamic banks).

Additionally, depositors can always use the calculator on the KDIF website to easily calculate the guaranteed amount for their deposit/account, taking into account accrued interest, the type and currency of the deposit, the exchange rate, and any loans held at the bank.

For more detailed information on how the guarantee for deposits held in second-tier banks works, you can visit the KDIF website at kdif.kz, send inquiries to info@kdif.kz, or call the KDIF call center at 1460 (toll-free).