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Banks and credit institutions are obligated to put 0.25% of their total deposits of under 1 billion rials with IDGF as a trust.
Banks and credit institutions are obligated to put 0.25% of their total deposits of under 1 billion rials with IDGF as a trust.

Healthy Increase in Iran Deposit Guarantee Fund Assets

The fund is a non-government public entity, the assets of which are generated through the membership fees of banks and credit institutions
With a two-year history of official activity in the Iranian banking system, IDGF has received membership fees from banks and credit institutions, amassing significant assets in line with global levels

Healthy Increase in Iran Deposit Guarantee Fund Assets

Iran Deposit Guarantee Fund complies with international standards and has managed to increase its assets, announced the fund's director.
"The IDGF was founded in 2013 on the basis of an article of the Fifth Five-Year Development Plan. Its statute was drafted and registered, and a directive was issued for its activities, which was approved and notified by the Cabinet," Mohammad Talebi also said in a talk with Fars News Agency.
The fund is a non-government public entity, the assets of which are generated through the membership fees of banks and credit institutions, "plus 0.25% of bank deposits". It has been formed with the main goal of guaranteeing that deposits in banks and credit institutions will be repaid in case of a banking crisis.
According to Talebi, IDGF will guarantee the deposits of each customer in every bank or credit institution  for up to 1 billion rials ($26,700) and should the bank or credit institution find itself bankrupt as per the regulations, the fund will reimburse depositors  up to that ceiling.
Its director noted that its board of trustees consists of Central Bank of Iran governor as the chairman of the board, with the Minister of Economic Affairs and Finance, the head of Planning and Budget Organization and the supervisory chief of the central bank, with "two others, including a private bank CEO and a public-sector bank CEO," completing the list.
"The board of directors is independent of its director," he said, noting that the board itself is formed by the board of trustees and with the direct approval of the CBI governor.
Talebi explained that banks and credit institutions are obligated to put 0.25% of their total deposits of under 1 billion rials with IDGF as a trust, which is equivalent to 2.5 million rials ($66.4).
According to the fund regulations, he added that if the fund's assets are not sufficient to cover the losses, it is allowed to borrow from the central bank after getting the formal approval of the Cabinet.
"As per the law, all banks and credit institutions are obligated to become a member of the deposit guarantee fund," he said.
"This is while a total of 38 banks, credit institutions and branches of foreign banks in Iran are currently a member of the fund."

No Guarantee for the Unauthorized  

Commenting on unauthorized banks and credit institutions, Talebi said their activities are outside the bounds of law and therefore no guarantees will be extended to them.
The director of IDGF noted that established norms across the world require 1.5% to 2% of the assets of banks to be allocated to insurance funds or deposit guarantees. With a two-year history of official activity in the Iranian banking system, IDGF has "received membership fees from banks and credit institutions, amassing significant assets in line with global levels".
He added that the fund had a 25–30% progress in attracting assets, which is a good sign.
Talebi also responded to reports claiming that a number of Iranian banks are bankrupt, saying he does not agree with them.
"It is possible that banks encounter hurdles and face problems regarding profitability and liquidity for a year or two and not pay dividends to their shareholders," he said, adding that this does not imply that they are bankrupt.
Recently, Vice Governor of CBI Akbar Komijani downplayed the woes of Iranian banking system, saying he does "not agree with the use of the term bankruptcy for banks" even though "a number of banks are facing problems such as shortage of capital and non-performing loans higher than international norms".

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