How much will you be paid if the bank that holds your savings goes bankrupt?

This month, the Banking, Insurance and AFP (SBS) increased the amount of coverage Deposit Insurance Fund the financial system has increased to S/125 714, but what is it?

The cover protects citizens in the event of financial institution in which you saved money for bankruptcy.

This measure applies to all savings that users have in banks, savings banks and financial companies during the period from March to May of the current year.

The amount of S$125,714 the fund covers this month is now more than the amount set for the previous quarter, as it had previously only covered about S$125,603 for each fund-related account. financial institutions.

It should be remembered that this applies to accounts that customers have with official financial companies and are regulated by the SBS, but the measure does not yet apply to savings and credit cooperatives.

How does the Deposit Insurance Fund work?

The fund is responsible for supporting deposits made by clients financial institutions in case they are declared in a state of dissolution and liquidation.

If the bank where your savings are kept goes bankrupt, the insurance payment is made on the basis of a list prepared by the GSB, which contains a list of the insured and the amounts to be covered.

Similarly, the amount of coverage includes all the money that the user has in the same financial institution. This means that if you have two accounts in different banksFSD covers you over S$125k for each one.

“It should be noted that this “insurance” is free for depositors, is automatic (does not require prior registration) and applies to each subject independently, that is, a person can have S / 125,000 in the bank and S / 125,000 in the box, and the FSD will be covered in both institutions,” explains Jorge Carrillo Acosta, financial expert at Pacífico Business School.

If your deposit is made in a foreign currency such as USD, the coverage is provided in the local currency equivalent.

As for joint accounts, SBS indicates that the remainder of the same is divided proportionately among the holders.

It should be noted that in order for the fund to operate, a financial institution must make contributions to it for 2 years. So if a new bank, finance company, or savings bank enters Peru today, they won’t have that active insurance for another 24 months.

Which organizations are covered by the fund?

To date, there are 42 financial institutions in which the Deposit Guarantee Fund operates:

• 16 banks: BCP, BBVA, Scotibank, Interbank, Falabella, Ripley, Mibanco, BanBif, Pichincha, GNB, Comercio, Alfin, Citibank, Santander, ICBC and Bank of China.
• 8 financial companies: Crediscotia, Compartamos, Confianza, Oh!, Efectiva, Credinka, Proempresa and Qapaq.
• 12 municipal savings banks: Arequipa, Piura, Huancayo, Cusco, Sullana, Trujillo, Ica, Tacna, Mainas, Lima, Del Santa and Paita.
• 6 rural savings banks: Cencosud Scotia, Raiz, Los Andes, Prymera, Del Centro and Incasur.

On the other hand, if a new financial institution enters Peru, they will not have this coverage until they complete 24 months of contributions, as is currently the case with BCI, which only started operating in the country in mid-2022,” Carrillo added.

Also remember that cooperatives are not covered by the fund. These entities have set up their own insurance called the Deposit Insurance Co-operative Fund (FSDC), which will have a maximum coverage of SGD 10,000 but will only come into effect in mid-2024.