FAQ
The Depositors’ Insurance Fund is a financially and administratively independent institution. Its primary purpose is to provide insurance for deposits held in banks operating within Libya, aiming to encourage citizens to save, reinforcing public confidence in the banking system, and ensuring financial stability. The DIF operates under the Supervision of the Central Bank of Libya (CBL)
The fund was established to protect the rights of depositors, maintain financial stability, and reduce the risks that may arise when banks fail.
- Current Accounts
- Savings Accounts
- Time Deposits
- Foreign currency deposits
- Funds deposited as collateral for loans or banking facilities
- Deposits of board members and executive managers of the troubled bank
The DIF was established under Article (91) of Law No. 1/2005 regarding banks & its Amendments. The law mandates ” The creation of a Fund known as the Depositors’ Insurance Fund (DIF), responsible for insuring deposits in banks operating in Libya. All banks accepting deposits are members of the DIF, in accordance with the provisions of both conventional and Islamic banking, as stipulated in the amended articles. The elements of the conventional Banking system. The amendments also included certain modifications to elements of the conventional banking framework.
The primary role of the Depositors’ Insurance Fund is to contribute to the stability of the financial system and to protect small depositors. This is achieved through the management of the depositors’ insurance system and its continuous review. aiming at assessing its effectiveness in fulfilling its objectives. The DIF also contributes to better banking risk management and ensures the desired level of financial stability.
The DIF contributes to financial stability by performing its duties in accordance with its foundational regulations. This includes the continuous and close monitoring of the financial positions of member banks in coordination with the Central Bank of Libya, in order to assess the likelihood of default, distress, or insolvency. Through its inspection division, and in collaboration with the Central Bank of Libya, the Fund monitors bank deposits, tracks developments affecting them, and evaluates the liquidity positions of banks. Additionally, through its compensation role, the DIF reimburses depositors for their deposits by following procedures that ensure depositors are compensated in accordance with the system’s regulations.
According to Article 91 of Law No. 1 of 2005, which establishes the Depositors’ Insurance Fund to provide deposit insurance for banks operating in Libya, all banks accepting deposits are members of the Fund. Furthermore, Article 4 of the DIF’s Articles of Regulation stipulates that the Fund includes all licensed banks and institutions authorized to accept deposits operating in Libya. Consequently, all banks operating in the country that accept deposits are legally required to join the DIF as members. Based on this framework, the current member banks are:
- Jumhouria Bank.
- Wahda Bank
- Sahara Bank
- National Commercial Bank
- Alwafa Bank.
- Aman Bank for Commerce and investment
- Bank of Commerce & Development.
- Mediterranean Bank.
- National Union Bank
- Assaray Trade and Investment Bank
- Alwaha Bank
- Arab Commercial Bank
- United Bank
- North Africa Bank
- First Gulf Libyan Bank
- Nuran Bank
- Libyan Foreign Bank
- Libyan Islamic Bank
- Yaqeen Bank
- Andalus Bank
- Arab Investment Islamic Bank
- Daman Islamic Bank
- Islamic Finance Bank
- Tadhamun Bank
All banks have fulfilled their respective contributions to the core capital of the DIF.
The Board of Directors of the DIF, at its second meeting for the year 2010 held on 31/05/2010, determined the deposits that are subject to and excluded from the DIF’S insurance as follows:
- Deposits covered by the DIF’s Insurance include bank deposits held with member banks in Libyan dinars, including current accounts, time deposits, and savings accounts, for all individuals, partnerships, companies, institutions, and entities in both the public and private sectors, as well as administrative bodies and units, within the maximum insurance limits specified in the DIF’s Articles of Association.
- Deposits not covered by the DIF’s insurance include the following:
- Deposits of any commercial bank held with another bank.
- Deposits of officials responsible for managing the bank where the deposit is held (the chairman and members of the board of directors, the general manager, his deputy, and his assistants).
- Deposits of persons tasked with auditing the accounts of the bank where the deposit is held (the head of the internal audit department, the head of the compliance unit, the head of the risk management department, and the external auditor).
- Deposits in foreign currency (during this phase).
Inclusion of a deposit under the DIF’s insurance does not require submitting any applications or documents, nor paying any amounts by depositors. Bank deposits are guaranteed automatically once the bank managing the deposit becomes a member of the DIF (membership is mandatory by law). It is emphasized that depositors bear no cost in return for obtaining the insurance provided by the DIF.
The annual subscription fee is paid by member banks on behalf of their customers, in accordance with the law and the Articles of Association under which the DIF was established. It should be noted that the Central Bank of Libya paid its share of the capital in a single payment, demonstrating its interest in and support for establishing the DIF and equipping it with the capabilities necessary to address any failure or bankruptcy that any member bank may face. The fee is determined as a percentage of the total deposit liabilities of member banks as of 31/12/… of the year preceding the year in which the fee is paid.
Yes, there are limits to the insurance, as specified in the DIF’s Articles of Association. Upper limits have been set for the insurance, which are reviewed and adjusted periodically by the DIF’s Board of Directors in a manner that achieves the objectives for which the DIF was established.
This is not possible. Bank deposit guarantees are not like property or life insurance. Rather, they are a system through which monetary authorities aim to provide adequate protection for depositors to recover their funds in case their banks face financial difficulties.
The DIF guarantees depositors’ funds in accordance with its Articles of Association. Depositors are compensated for their funds through immediate compensation within a maximum period of one month from the date claims are submitted for their Libyan-dinar deposits held with a failed or bankrupt bank.
Under the DIF’s Articles of Association, accounts owned by one person with the same bank—regardless of the branch—are considered a single account. Accordingly, deposits belonging to one depositor across multiple branches of the same bank are treated as one deposit, and the guarantee amount is calculated on this basis.
FAQ
The DIF relies on a tiered system in the process of guaranteeing depositors’ deposits, and these tiers are divided into five tiers, with the maximum guarantee being 250,000 Libyan dinars, which is represented in the fifth tier, according to the bylaws – Article No. 28.
The depositor can use the “Calculate your compensation immediately” tool available on the website, where the deposit amount is entered to automatically display the compensation amount, in accordance with the legal guarantee limits.
The compensation will be disbursed after an official decision is issued to liquidate the failing bank, and the procedures are completed within thirty days from the date of the liquidation decision.
No, deposits held with different banks covered under separate insurances. The guarantee or compensation is applied based on the maximum limit for each deposit held with each bank individually.
Yes, this can be explained in a simplified manner. First, it should be noted that Chapter Six of the Articles of Association is largely dedicated to provisions related to deposit insurances. The following example is provided for clarification:
Example: A depositor holds a deposit with Bank (S) across several of its branches totaling 150,000 dinars, and the bank is declared bankrupt. How would compensation be handled under the DIF’s Articles of Association?
The DIF’s Articles of Association adopt a tiered mechanism to determine the amount of insurance, as specified in Article (28). Accordingly, the insurance would be calculated as follows:
Tier | Deposit Range (Dinars) | Amount Guaranteed |
1 | Up to 10,000 | 10,000 |
2 | 10,001 – 100,000 | 50,000 |
3 | 100,001 – 150,000 | 12,500 |
Total guaranteed amount: 72,500 dinars.
Yes, they are covered. The depositor’s nationality does not affect their entitlement to receive insurance for their deposits. Therefore, their funds have the same protection as deposits held by Libyan nationals.
Since the DIF is still in its early stage of establishment, it does not currently guarantee deposits in foreign currencies. However, when drafting the Articles of Association, the legislation did not rule out the possibility of guaranteeing such deposits (foreign-currency deposits) in the future. This would become feasible once the DIF establishes a fully developed institutional entity capable to monitor surrounding conditions, develop and adapt accordingly. Foreign-currency deposits may eventually fall under the DIF’s insurance, especially if it becomes evident that their relative importance within total bank deposits is particularly high.
Article (28) of the DIF’s Articles of Association defines the maximum limits of the insurance provided by the DIF. These limits were set taking into account the following considerations:
- To cover the largest possible segment of depositors, especially small depositors.
- To ensure that the insurance serves the depositor and fulfills its purpose by preventing any impact that could negatively affect the management of the depositor’s daily life.
Accordingly, the insurance limits under the system are defined as follows:
- Full insurance if the deposit amount does not exceed 10,000 dinars.
- Insurance of half the deposit value if the deposit amount is between 10,001 dinars and 100,000 dinars.
- Insurance of one quarter of the deposit value if the deposit amount is between 100,001 dinars and 400,000 dinars.
- Insurance of one eighth of the deposit value if the deposit amount is between 400,001 dinars and 1,000,000 dinars.
- Insurance of one tenth of the deposit value, up to a maximum of 250,000 dinars, if the deposit amount exceeds 1,000,000 dinars.
In this regard, it should be noted that the value of the insurances provided under the DIF’s Articles of Association clearly exceeds the insurances offered by similar institutions in other countries that preceded Libya in this field.
This reflects the authorities’ desire to adopt effective and sound monetary policies in Libya, supporting the strength and resilience of the banking sector in overcoming any problems it may face, through the provision of compensation (insurances) at the levels indicated.
The depositor receives the insured amount referred to above as immediate compensation within one month from the date of submitting the claim. The remaining amounts are then compensated from the proceeds resulting from the work of the liquidation committee, in accordance with the order of priority set out in the Libyan Commercial Law.
Depositors are required to follow up on, monitor, and analyze the financial positions of the banks they deal with—especially depositors who have the capacity to do so—in a manner that ensures self-monitoring of their funds. This, in turn, is reflected in their deposit decisions, which should be made objectively and transparently, based on two main factors: the assessment of risk and the associated return.
The relationship between the DIF and the Central Bank is an institutional one, as the DIF operates under the supervision of the CBL. The establishment of the DIF came as an addition to the national banking safety net that the Central Bank is building.
Accordingly, the Central Bank directs the components of this network namely the banking supervisory bodies toward achieving integration, harmony, and enhanced cooperation, as well as the exchange of expertise and information among them, in a manner that serves the objectives of the state’s monetary policy.
Thus, the establishment of the DIF does not mean the end of the CBL’s supervisory role. On the contrary, it strengthens and activates that role, given that it is the primary regulator of the banking system and its responsibility for achieving stability is ongoing and mandated by law. In this context, the DIF is considered one of the tools for achieving such stability, as it operates under the umbrella of the CBL, with the founders’ efforts unified throughout all stages—toward attaining the desired financial stability.
The DIF does not provide any advice, information, or data in this regard. Rather, the responsibility lies with the depositor to decide where to place their funds. However, the DIF encourages deposit decisions to be based on objective criteria, namely the degree of associated risk and the expected return.
The most important feature that distinguishes the DIF in Libya from similar establishments, is the value of the insurances it provides, which exceed those offered by comparable institutions. Under the DIF’s Articles of Association, the maximum insurance reaches 250,000 dinars. By comparison, the maximum insurance in the United States is USD 100,000, in the United Kingdom GBP 20,000, and in Jordan it does not exceed 50,000 dinars. This reflects the monetary authorities’ desire to make banks operating in Libya among the strongest and most resilient not only in the Arab region, but worldwide.
This can be done via the electronic complaints form on the Contact Us page, or through the Fund’s official email info@dif.gov.ly, with a guarantee of confidentiality of information and privacy of the sender.
