Kyrgyzstan proposes changes to bank deposit protection rules

Kyrgyzstan's Ministry of Economy and Commerce is seeking public comment on a bill to amend the Law on the Protection of Bank Deposits. The current system, established in 2008, has remained unchanged for 17 years. During this period, the volume of deposits has surged sevenfold since 2020, while the insurance fund has only tripled. This imbalance has caused the fund's sufficiency ratio to drop from 10.8% to 4.3%, falling below the legal requirement of 12%.

To address this, the ministry suggests implementing new tariffs for participants in the deposit protection system. Banks would face rates between 0.4% and 0.5% of their total deposit base, with the exact percentage determined by the bank's risk level. Microfinance companies and housing savings companies would pay 0.5% of their total deposit base. Currently, all participants pay a flat rate of 0.2%.

The ministry projects that with these differentiated contribution rates, the Deposit Protection Fund will reach 42.5 billion soms by the end of 2030. This would increase the coverage ratio from the current 4.3% to 9.7%. The proposed legislation also aims to refine the calculation of the total deposit base, using the average daily base over a quarter for a more objective assessment of participants' liabilities. Additionally, the Deposit Protection Agency will gain the authority to request detailed risk assessment information from banks, and the law will establish a legal framework for conducting these risk evaluations.