Board of Directors of the Palestine Deposit Insurance Corporation Holds its First Meeting

The Board of Directors of the Palestine Deposit Insurance Corporation (PDIC), which aims to protect bank customers' deposits, held its first meeting in Ramallah on Thursday 26/09/2013. During the meeting, the PDIC’s business strategy was approved along with its work plan by virtue of the duties entrusted to it by law. The Board of Directors is composed of Dr. Jihad Khalil Al Wazir, Governor of the Palestine Monetary Authority (PMA) as Chairman, a representative from the Ministry of Finance, the Companies' Controller from the Ministry of National Economy and four other independent members: Dr. Basim Khouri, Professor Ali Al Safariny, Dr Sa’id Haifa, and Mr Mohammed Al Aiyidi.

During their first meeting, the BOD set the insurance coverage limit to $10,000 for each account, and the percentage of banks' contributions towards the PDIC’s reserve funds at 3/1000 of insured deposits to be paid on a quarterly basis. This is in addition to the banks' annual subscription of USD 100,000 per bank for this fund. At the same time, the government would contribute USD 20 million towards PDIC's capital.

His Excellency President Mahmoud Abbas signed the PDIC's law on 29/05/2013. The law regulates PDIC’s financial and administrative operations as an independent establishment. In the launching stage, the PDIC will cover 93% of customers' deposits in the Palestinian banking system. The purpose of the PDIC law is to strengthen customers' confidence in the banking system and to contribute to maintaining its stability. As such, membership is mandatory upon all banks licensed by the PMA. Under this law, the PDIC’s monetary administration will be conducted via two separate funds: the first is for traditional banks and the second for Islamic Banks, whereby the latter's administration will be carried out in accordance with the terms and conditions of the Sharia' provisions.

Dr. Al Wazir stated that “the existence of such a corporation will boost the financial safety net and will encourage savings activity. Furthermore, it will strengthen financial growth in Palestine.” Dr. Al Wazir added: “In the event of liquidating any bank for whatever reason, the PDIC will pay depositors for their deposits within the limits of the stipulated insurance cap immediately. Simultaneously, it will fulfill its monetary obligations to other depositors as stipulated by the law, and liquidating procedures.”

It is worth noting that, at the meeting of donor countries held in New York on 26th September, the World Bank commended the establishment of the Palestine Deposit Insurance Corporation and its favorable impact on the strength of the financial safety net and financial system stability in Palestine. The establishment of the PDIC comes at a time when the banking system is fully sound and its capital adequacy higher than the ratio specified by international standards.