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Deposit insurance system is the most advanced association among those established up to now for the protection of deposits. The system works between deposit owners, banks accepting the deposits and the institutions taking the deposits under insurance guarantee. It takes its sanction power from rule of law based on country’s legislation. The association providing insurance collect specific premium against this transaction.
The Association steps in through the resolutions written in the related legislation when the bank in which deposits are invested can not repay the owner’s deposit. It pays the total amount under the insurance to the depositor/s. In order to take back the totals it paid, It initiates the legal process about the bank having difficulty in paying.
According to art. 111 of Banking Code, “The Savings Deposit Insurance Fund, which is a public legal entity and which has administrative and financial autonomy has been established to insure deposits in order to protect the rights and interests of depositors and to ensure confidence and stability in financial markets; insure deposits and contribution funds; manage the banks with the Fund; strengthen and restructure their financial standing; transfer, merge, sell or liquidate such banks; execute and conclude the follow-up and collection transactions of the receivables of the Fund, manage the Fund’s assets and resources and perform other duties assigned thereto by the Law, within the framework of the powers given by this Law and other applicable legislation”.
The Fund consists of the Savings Deposit Insurance Fund Board and the Chairman’s Office.
The Savings Deposits Insurance Fund Board is the decision-making organ of the Fund . The Board shall consist of seven members, including one chairman and one vice chairman. The chairman of the Fund Board shall be the chairman of the Fund.
The Fund shall be independent when executing its duties. Decisions of the Fund shall not be supervised for appropriateness. No organ, authority or person may issue orders or instructions to influence the decisions of the Board.
DUTIES AND POWERS OF SAVINGS DEPOSIT INSURANCE FUND
Duties and powers of Savings Deposit Insurance Fund according to the provisions of Law No: 5411 are as follows:
1) To insure the savings deposits and participation funds in the credit institutions belonging to real persons, (Article 63)
2) To determine the scope and amount of the savings deposit and participation funds which are subject to insurance with the opinion of the Central Bank, BRSA and Treasury Undersecretaries, (Article 63)
3) To determine risk based insurance premiums timetable, collection time and form and other issues in cooperation with the opinion of BRSA, (Article 63)
4) To pay the insured deposits and participation funds from its resources, in the credit institutions whose operating permission has been revoked, directly or through another bank, (Article 63)