ADIF starts paying compensations to uninsured depositors

By Azernews

By Sara Israfilbayova

Azerbaijan Deposit Insurance Fund (ADIF) will start paying compensations to uninsured depositors of the Gandja Bank from June 2.

The total number of uninsured individuals and legal entities in the Gandja Bank exceeds 500 people, Executive Director of ADIF Azad Javadov said on June 1.

"Within the first tranche, each uninsured client of the bank will be paid 70,000 manats [$41,125], after which only 13 individuals and legal entities will remain," Javadov said.

The license of Gandja Bank was withdrawn in January 2016 due to its failure to meet the CBA requirements regarding the total capital volume and obligations to creditors.

Gandja Bank was declared bankrupt upon the decision of the Baku Administrative Economic Court ?1 dated February 15, 2016. The liquidator of the bank is ADIF.

Javadov further added that in the near future the second tranche of compensations will be paid to uninsured investors of the "Caucasian Development Bank".

"We have already paid the first tranche for the uninsured deposits of the Caucasus Development Bank: 50,000 manats [$29,375] were paid to each investor. After we pay compensation to 31 customers, only 11 individuals and legal entities will remain”, Javadov added.

The CBA revoked the bank's license on January 27, 2016 due to the fact that the total capital of the bank did not meet the requirements of the CBA [50 million manats-$29.4 million] and it could not fulfill its obligations to creditors.

In general, in 8 of the closed 12 banks, the process of paying uninsured deposits is close to completion, he concluded.

ADIF was founded on August 12, 2007 after the Law on Deposit Insurance was adopted by the Parliament [Milli Majlis] of Azerbaijan.

The purpose of establishing the Deposit Insurance Scheme is to prevent the risk of losing money deposited by individuals and to ensure the sustainability and development of the financial and banking system whenever banks and local branch offices of foreign banks become insolvent. Azerbaijan Deposit Insurance Fund

The fund is regulated by the Board of Custodians and by Executive director based on the Law on Deposit Insurance.