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1: About the DIF
The Depositors' Funds Guarantee Fund was established with the aim of protecting the rights of depositors and promoting stability in the banking sector. The Fund operates as an independent entity managed according to sound governance frameworks, and contributes to reducing the financial risks resulting from the failure or liquidation of banks.
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2: Vision
The fund should be a leading model in protecting depositors' funds, and a supporter of financial stability and economic development.
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3: The Message
Providing a legal and financial protection umbrella for depositors, enhancing transparency in the banking system, and ensuring the fund's readiness to deal with any emergency that may affect depositors' funds.
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4: Values
1. Transparency
2. Credibility
3. Efficiency
4. Independence
5. Accountability
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5: Establishment
The Depositors’ Funds Guarantee Fund was established in accordance with Law No. (1) of 2005 on Banks, amended by Law No. (46) of 2012, and its basic system was issued by the decision of the General People’s Committee (formerly) No. 513 of 2009, issued on 07/11/2009, and the Fund commenced its activity on 01/03/2010, with the aim of enabling the banking sector in Libya to keep pace with international developments in this field.
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6: Organizational Structure
The fund adopts an administrative and organizational structure that ensures efficient performance, and includes:
Board of Directors:
The fund is managed by a seven-member board of directors, chaired by the Deputy Governor of the Central Bank of Libya, and including the Undersecretary of the Ministry of Economy, the Undersecretary of the Ministry of Finance, the Director of the Banking and Monetary Control Department, and three members appointed by the Central Bank of Libya’s board of directors. The board is responsible for several tasks, most importantly setting policies and strategies, approving the annual budget, approving the investment plan and policy for the fund’s assets, adopting the organizational structure and job descriptions, approving the disclosure and transparency policy for publishing data on the fund’s activities, and other related tasks.
Member of the Board of Directors
Executive Management:
The Dif has a general manager and a deputy general manager, who are responsible for overseeing the fund’s operations through a group of departments.
The technical, financial, and legal departments consist of:
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1
Administrative Affairs and Human Resources Department
This department is responsible for implementing laws, regulations, systems, administrative decisions, human resources, public relations, training and services.
2
Accounting and Finance Department
It is responsible for monitoring all financial activities and operations of the fund, from maintaining accounting records and systems, to monitoring the preparation of the draft budget and final accounts of the fund, and carrying out operations related to financial resources and reserves.
3
Risk management and inspection
It examines the records of member banks of the fund that are facing problems according to the banks’ published financial statements, conducts financial analysis of the published data and monitors economic indicators, in particular those relating to deposits, liquidity and reserves, capital reports, credit and risk positions of banks, and securities activity.
4
Studies and Investment Department
The Studies and Investment Department is responsible for preparing studies and research on activities related to the Fund’s functions. It also manages the Fund’s investments and monitors the returns, which are used to bolster the Fund’s reserves.
Furthermore, the Fund does not distribute profits generated from its available investment instruments, in accordance with the provisions of its Articles of Association and the resolutions issued by the Board of Directors.
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Internal Audit Office
It is concerned with conducting audits and reviews of the operations carried out in the fund, and examining records, documents, statements, and other documents, in order to achieve a high degree of confidence in the accuracy and validity of the implementation of that information.
6
Legal Affairs Office
The office is responsible for providing legal opinions and advice on the topics presented to it, as well as following up on and completing all legal procedures for the Fund’s business and legal cases, and preparing and drafting decisions issued by the Board of Directors and the General Manager, and other tasks.
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7. Key features of the Dif
The main features of the fund were set out within a comprehensive legal framework that clarifies the tasks and roles assigned to it, the powers it is responsible for, and the procedures it undertakes to achieve the basic objective for which it was established, in accordance with what is included in the fund’s bylaws regarding membership and the conditions of guarantee and coverage.
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– Deposit guarantee
The Fund is legally responsible for guaranteeing depositors' funds in member banks and for paying the guarantee amounts to depositors in the event of any bank's liquidation by decision of the Central Bank. In such a case, the Fund becomes obligated to pay the guarantee amounts from its reserves as an agent for the depositors, in accordance with the Fund's bylaws. The guarantee mechanism, guarantee ceiling, and scope of coverage are organized as follows:
1. Membership:
Membership in the Depositors’ Funds Guarantee Fund is mandatory for all banks and institutions licensed to accept deposits in Libya.
2. Warranty ceiling:
The Depositors’ Funds Guarantee Fund shall compensate depositors in the event of the bankruptcy or liquidation of one of its member banks, according to the limits specified in the Fund’s bylaws, as follows:
A- The full value of the deposit, if it is 10,000 dinars or less.
B- Half the value of the deposit, for amounts exceeding 10,000 dinars but not exceeding 100,000 dinars.
C- One-quarter of the value of the deposit, for amounts exceeding 100,000 dinars but not exceeding 400,000 dinars.
D- One-eighth of the value of the deposit, for amounts exceeding 400,000 dinars but not exceeding one million dinars.
E- One-tenth of the value of the deposit, for amounts exceeding one million dinars, provided that the maximum guarantee amount is 250,000 dinars.
3. Scope of compensation:
The guarantee provided by the Fund is limited to bank deposits guaranteed with member banks, as follows:
A- Guaranteed deposits:
Commercial banks:
- Demand Deposits (Current Accounts).
- Savings Deposits (Savings Deposits).
- Time Deposits (Term Deposits).
Islamic banks:
Demand deposits (current accounts).
B) Unsecured deposits:
- Foreign currency deposits.
- Investment accounts in Islamic banks.
- Any amounts deposited by a person as collateral for loans or banking facilities (cash collateral) obtained by another person, if there is a credit balance of those amounts after the repayment of the obligations that were deposited as collateral for those loans.
4. Compensation currency:
Currently, the fund guarantees deposits in Libyan dinars only.
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– Reserve management:
In order for the Fund to efficiently and effectively fulfill its legal obligations, as stipulated in its bylaws, and to ensure full protection for the majority of depositors in member banks, it must establish specific reserves amounting to 3% of total deposits subject to the provisions of its bylaws. These reserves are to be used to compensate depositors in the event of a bank's bankruptcy or liquidation. These reserves are comprised of annual subscription fees collected from member banks.
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– Monitoring the performance of member banks:
In line with the Libyan legislator's emphasis on the necessity and importance of measuring banking sector risks, and to maintain the integrity of risk management and regulatory activities, the Fund is able to identify and predict the degree of risks to which banks are exposed (credit risk, market risk, operational risk). This enables the Fund to prepare early for any defaults, bankruptcies, or liquidation of member banks. The Fund undertakes this task through on-site and off-site oversight of its members, in accordance with its bylaws, to ensure the efficient and effective management of compensation processes as required, and to cooperate and coordinate with participants in the national financial safety net.
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– Subscription fees:
The member bank shall pay an annual subscription fee of one per thousand (0.001) of the total of its creative liabilities subject to the provisions of the Fund’s bylaws, not exceeding twenty million (20,000,000) dinars and not less than two hundred and fifty thousand (250,000) dinars. The annual subscription fee percentage and the rules for its calculation may be amended in accordance with what is determined by the Board of Directors of the Central Bank of Libya, and it shall be reviewed and amended when needed by the same entity. The annual subscription percentage shall be calculated based on the total value of creative liabilities subject to guarantee at the member bank at the end of December of the previous fiscal year.
