How are Payouts Made When a Bank's License is Revoked in the Republic of Kazakhstan?

When placing their savings in a bank, depositors often ask themselves questions like, “What if something happens and the bank’s license is revoked?” or “If it goes bankrupt, who will return my money and how?” Many questions arise. It is therefore important to remember that Kazakhstan currently has a deposit protection system that ensures the return of savings when an insured event occurs at a bank (revocation of its license). This process is regulated by the Kazakhstan Deposit Insurance Fund (KDIF).

The KDIF guarantees funds placed in all Kazakhstani banks that accept deposits from individuals, including individual entrepreneurs, with the exception of Islamic banks. If the regulator revokes a bank’s license, the KDIF returns the money that was placed in deposits, on accounts, and on payment cards to depositors, up to the maximum guarantee amount:

• 20 million tenge for savings deposits in tenge;
• 10 million tenge for cards, accounts, and other deposits in tenge;
• 5 million tenge for cards, accounts, and deposits in foreign currency.

In cases where multiple deposits of different types and currencies are held in one bank, the total remaining balance of all deposits is guaranteed in the event of an insured event, subject to the limits for each type of deposit. The guarantee payout in such a case does not exceed the maximum reimbursement amount of 20 million tenge.

The established maximum guarantee amounts help ensure full protection for 99.8% of individual accounts in the deposit guarantee system’s member banks.

Here is how the guarantee payout will be made if a bank’s license is revoked:

• The acceptance of applications for reimbursement begins no later than 35 business days from the date of license revocation. Within 30 business days from the date of the bank’s license revocation, the KDIF is required to inform the public of the payout start date, indicating the agent banks making the reimbursement, as well as the period and locations for payouts, through national print publications, its official website, and the media;

• Applications for reimbursement are accepted for a period of one year. If depositors do not apply for reimbursement, their unclaimed amounts will be transferred to their individual accounts in the Unified Accumulative Pension Fund. It should be emphasized here that, despite this, depositors have the right to apply for a payout if the established payout period was missed for a valid reason.

To date, the KDIF guarantees:

• savings, term, and non-term deposits (according to the KDIF classification);
• on-demand deposits;
• conditional deposits;
• deposits in the housing construction savings system;
• AQYL educational deposits with a state premium;
• money in current accounts and on payment cards;
• accrued interest on deposits.

In turn, the following are not protected:

• metallic accounts of individuals;
• money and valuables placed in bank safe deposit boxes;
• deposit certificates;
• deposits of legal entities;
• deposits placed in Islamic banks, including branches of foreign Islamic banks opened in the territory of Kazakhstan.

It should be stressed that it is not necessary to conclude a separate agreement to protect one’s savings in banks. Funds are automatically covered by the KDIF from the moment an account (deposit) is opened.

“I would also like to note that since the second half of 2023, Kazakhstani citizens can see the key conditions of their account (deposit) before concluding a banking agreement. These include the maximum guarantee amount for a specific banking product, its type, currency, and withdrawal conditions. This information is displayed by banks in a separate document signed by the client when concluding a bank account (deposit) agreement, regardless of the client’s method of application (online—via a mobile application/bank website, or in writing—at its branches). The innovations we have initiated are aimed at achieving a conscious approach by clients to choosing a deposit and understanding its guarantee conditions, which will allow them to assess their risks in advance and make the right decisions.”

Adil Utembayev, Chairman of the KDIF

We remind you that from August 2024, for the convenience of depositors, banks will be required to notify clients of the key conditions of a bank account or deposit in a tabular and easy-to-understand format when signing the agreement.

More detailed information about the deposit guarantee, how to apply, and the necessary documents is available on the Fund’s website.