NEWS .

ON THE 31ST OF JULY THE ACT CAME INTO FORCE PROVIDING FOR 100% REIMBURSEMENT OF DEPOSITS OF PHYSICAL PERSONS IN BELARUSIAN BANKS.

In Belarus on the 31st of July new statutory provisions on reimbursement of bank deposits came into effect. The provisions bring the existing law into compliance with the Decree of the President of the Republic of Belarus No. 22 (2008), which for the first time stipulated for 100% reimbursement of the deposit amount in case of revocation of the bank's licence for attraction of monetary funds from physical persons.

As part of bringing the Act into compliance with the Decree limitation of maximum amount of deposit (which used to be equivalent to Five Thousand Euros before) has been withdrawn from the Article 8 of the Act. Provision for 100% reimbursement has been amplified by the clarifying phrase «regardless the quantity of bank deposits of one physical person in a particular bank».

Important amendments have been made to the Article 36 regulating transition provisions and determining the order of application of the Act to legal relationship appeared before it came into force.

The original version provided for certain particularities of reimbursement of deposits, placed before the law was passed, during the first two years after the new law came into force. Then these transition provisions were abolished and from now on the common procedure exists. This means that the law on reimbursement of bank deposits is fully retroactive, with no withdrawals of the original version.

Obviously, these amendments aim to improve the people's trust to the banking system of Belarus and increase the amount of bank deposits.

At the same time, from the short-term perspective efficiency of these measures might be doubtful. Dynamics of deposits is being affected not only by legal factors but also by economic ones, such as, for example, decline in earnings of the population, including those forwarded for savings. However, in general, the changes can be evaluated as positive, creating a good foundation for development of civilized relationship in terms of attraction of resources of physical persons to the banking system and economy of the country.

We would also like to pay your attention to other amendments to the Act.

In particular, functions of the Agency for guaranteed reimbursement of bank deposits have been amplified by the following: upon decision of the National Bank, to perform functions of the temporal administration for management of the bank; upon decision of the economic court, to perform functions of the crisis manager of the bank in the bankruptcy proceedings.

The Act also extends the possible range of sources for formation of the Agency's reserve (which is a part of the Agency's property directly designated for payment of reimbursements to physical persons) by including the other sources provided by legislative acts. Earlier the list of sources was complete, with the main ones in the form of obligatory contributions by banks and objects for investment of funds by the Agency, as well as income from such investment. It is supposed that such formulation will allow using other sources with no necessity of amendments to the Act on reimbursement of bank deposits.

Amendments and additions to the Act on reimbursement of bank deposits have been officially published in the National Register of Legal Acts of the Republic of Belarus on the 21st of July 2009 with No. 171, 2/1593.