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Insurance is a means of protection from financial loss in which, in exchange for a fee, a party agrees to compensate another party in the event of a certain loss, damage, or injury. It is a form of risk management, primarily used to protect against the risk of a contingent or uncertain loss.
The Federal Deposit Insurance Corporation (FDIC) is a United States government corporation supplying deposit insurance to depositors in American commercial banks and savings banks. The FDIC was created by the Banking Act of 1933, enacted during the Great Depression to restore trust in the American banking system. More than one-third of banks failed in the years before the FDIC's creation, and bank runs were common. The insurance limit was initially US$2,500 per ownership category, and this has been increased several times over the years. Since the enactment of the Dodd–Frank Wall Street Reform and Consumer Protection Act in 2010, the FDIC insures deposits in member banks up to $250,000 per ownership category. FDIC insurance is backed by the full faith and credit of the government of the United States, and according to the FDIC, "since its start in 1933 no depositor has ever lost a penny of FDIC-insured funds".
Life insurance is a contract between an insurance policy holder and an insurer or assurer, where the insurer promises to pay a designated beneficiary a sum of money upon the death of an insured person. Depending on the contract, other events such as terminal illness or critical illness can also trigger payment. The policyholder typically pays a premium, either regularly or as one lump sum. The benefits may include other expenses, such as funeral expenses.
A certificate of deposit (CD) is a time deposit sold by banks, thrift institutions, and credit unions in the United States. CDs typically differ from savings accounts because the CD has a specific, fixed term before money can be withdrawn without penalty and generally higher interest rates. CDs typically require a minimum deposit, and may offer higher rates for larger deposits. The bank expects the CDs to be held until maturity, at which time they can be withdrawn and interest paid.
The National Credit Union Administration (NCUA) is an American government-backed insurer of credit unions in the United States, one of two agencies that provide deposit insurance to depositors in U.S. depository institutions, the other being the Federal Deposit Insurance Corporation (FDIC), which insures commercial banks and savings institutions. The NCUA is an independent federal agency created by the United States Congress to regulate, charter, and supervise federal credit unions. With the backing of the full faith and credit of the U.S. government, the NCUA operates and manages the National Credit Union Share Insurance Fund, insuring the deposits of more than 124 million account holders in all federal credit unions and the overwhelming majority of state-chartered credit unions. Besides the Share Insurance Fund, the NCUA operates three other funds: the NCUA Operating Fund, the Central Liquidity Facility (CLF), and the Community Development Revolving Loan Fund (CDRLF). The NCUA Operating Fund, with the Share Insurance Fund, finances the agency's operations.
Underwriting (UW) services are provided by some large financial institutions, such as banks, insurance companies and investment houses, whereby they guarantee payment in case of damage or financial loss and accept the financial risk for liability arising from such guarantee. An underwriting arrangement may be created in a number of situations including insurance, issues of security in a public offering, and bank lending, among others. The person or institution that agrees to sell a minimum number of securities of the company for commission is called the underwriter.
A savings account is a bank account at a retail bank. Common features include a limited number of withdrawals, a lack of cheque and linked debit card facilities, limited transfer options and the inability to be overdrawn. Traditionally, transactions on savings accounts were widely recorded in a passbook, and were sometimes called passbook savings accounts, and bank statements were not provided; however, currently such transactions are commonly recorded electronically and accessible online.
The Canada Deposit Insurance Corporation is a Canadian federal Crown Corporation created by Parliament in 1967 to provide deposit insurance to depositors in Canadian commercial banks and savings institutions. CDIC insures Canadians' deposits held at Canadian banks up to C$100,000 in case of a bank failure. CDIC automatically insures many types of savings against the failure of a financial institution. However, the bank must be a CDIC member and not all savings are insured. CDIC is also Canada's resolution authority for banks, federally regulated credit unions, trust and loan companies as well as associations governed by the Cooperative Credit Associations Act that take deposits.
Deposit insurance or deposit protection is a measure implemented in many countries to protect bank depositors, in full or in part, from losses caused by a bank's inability to pay its debts when due. Deposit insurance systems are one component of a financial system safety net that promotes financial stability.
Deposit Insurance Agency (DIA) is a Russian state corporation established in January 2004 to manage operation of the deposit insurance system in the Russian Federation. DIA pays insurance compensations to depositors of failed banks. DIA also exercises bankruptcy administrator functions of insolvent banks, non–governmental pension funds and insurance companies, it is responsible for resolution of banks and managing the system of guaranteeing the rights of insured persons in the mandatory pension insurance system.
The Korea Deposit Insurance Corporation (KDIC) is a South Korean deposit insurance corporation, established in 1996 to protect depositors and maintain the stability of the financial system. The main functions of KDIC are insurance management, risk surveillance, resolution, recovery, and investigation.
Bond insurance, also known as "financial guaranty insurance", is a type of insurance whereby an insurance company guarantees scheduled payments of interest and principal on a bond or other security in the event of a payment default by the issuer of the bond or security. It is a form of "credit enhancement" that generally results in the rating of the insured security being the higher of (i) the claims-paying rating of the insurer or (ii) the rating the bond would have without insurance.
A bank failure occurs when a bank is unable to meet its obligations to its depositors or other creditors because it has become insolvent or too illiquid to meet its liabilities. A bank typically fails economically when the market value of its assets falls below the market value of its liabilities. The insolvent bank either borrows from other solvent banks or sells its assets at a lower price than its market value to generate liquid money to pay its depositors on demand. The inability of the solvent banks to lend liquid money to the insolvent bank creates a bank panic among the depositors as more depositors try to take out cash deposits from the bank. As such, the bank is unable to fulfill the demands of all of its depositors on time. A bank may be taken over by the regulating government agency if its shareholders' equity are below the regulatory minimum.
The National Credit Union Share Insurance Fund provides deposit insurance to protect the accounts of credit union members at federally insured institutions in the United States. Created in 1970, the Share Insurance Fund is administered by the National Credit Union Administration, an independent federal financial regulator. The Share Insurance Fund is funded completely by participating credit unions, and not one penny of insured savings has ever been lost by a member of a federally insured credit union. The Share Insurance Fund is backed by the full faith and credit of the United States government.
Bank regulation in the United States is highly fragmented compared with other G10 countries, where most countries have only one bank regulator. In the U.S., banking is regulated at both the federal and state level. Depending on the type of charter a banking organization has and on its organizational structure, it may be subject to numerous federal and state banking regulations. Apart from the bank regulatory agencies the U.S. maintains separate securities, commodities, and insurance regulatory agencies at the federal and state level, unlike Japan and the United Kingdom. Bank examiners are generally employed to supervise banks and to ensure compliance with regulations.
The New York State Banking Department was created by the New York Legislature on April 15, 1851, with a chief officer to be known as the Superintendent. The New York State Banking Department was the oldest bank regulatory agency in the United States.
The Nigeria Deposit Insurance Corporation (NDIC) is a statutory body established by NDIC Act No. 16 of 2006 with exclusive mandate of administering the Deposit Insurance System (DIS) in Nigeria. As one of the components of the nation's financial safety-net arrangement, the NDIC has the responsibility of protecting depositors and guaranteeing the payment of insured sums when the license of a deposit-taking financial institution is revoked by the Central Bank of Nigeria (CBN)..
A deposit account is a bank account maintained by a financial institution in which a customer can deposit and withdraw money. Deposit accounts can be savings accounts, current accounts or any of several other types of accounts explained below.
A fixed deposit (FD) is a tenured deposit account provided by banks or non-bank financial institutions which provides investors a higher rate of interest than a regular savings account, until the given maturity date. It may or may not require the creation of a separate account. The term fixed deposit is most commonly used in India and the United States. It is known as a term deposit or time deposit in Canada, Australia, New Zealand, and as a bond in the United Kingdom.
The Rhode Island banking crisis took place in the early 1990s, when approximately a third of the US state of Rhode Island's population lost access to funds in their bank accounts. The events were triggered by the failure of a Providence bank, Heritage Loan & Investment, due to long-term embezzlement by its president. News of its problems led to a bank run in which customers tried to withdraw money from the bank which did not have enough money available. In normal circumstances, depositors would be protected by the bank's insurance, but the state's private insurer had a long history of problems and was unable to fulfill its commitments. When the insurer collapsed, Governor Bruce Sundlun announced the closure of 45 credit unions and banks just hours after his inauguration.
References
- ↑ "Srikrishna panel insists on single unified regulator in financial sector". Business Standard. 21 March 2013. Retrieved 23 November 2013.
- ↑ "DICGC - About Us - Profile".[ permanent dead link ]
- ↑ "Deposit Insurance of Rs 5 Lakh: Customers to Get Money in 90 Days if Bank Under Moratorium".
- ↑ https://www.business-standard.com/budget/article/budget-2020-govt-increases-deposit-insurance-to-rs-5-lakh-from-rs-1-lakh-120020200009_1.html.
{{cite web}}: Missing or empty|title=(help) - ↑ "About Us - Profile". ..Dicgc. Archived from the original on 24 March 2013. Retrieved 23 November 2013.
- ↑ "DICGC_Flyer.pdf" (PDF). DICGC. p. Pdf page 3. Retrieved 22 March 2023.
For the purpose of the above ceiling, all the deposit accounts of a depositor in the 'same right and the same capacity' maintained across all branches of the concerned bank are clubbed.
- ↑ "PRS - Bill Track - The Financial Resolution and Deposit Insurance Bill, 2017". www.prsindia.org. Archived from the original on 6 January 2018. Retrieved 4 May 2018.
- ↑ "The FRDI Bill and concerns of the depositor". The Hindu . 29 November 2017.