JODICs Overview - Jordan Deposit Insurance Corporation

Jordan Deposit Insurance Corporation (JODIC) is a legal entity with financial and administrative independence. It is a public institution established pursuant to its Law to protect depositors by insuring their deposits in accordance with the provisions of JODIC’s Law. Through this mandate, JODIC encourages savings, enhances confidence in the banking system, and contributes to maintaining banking and financial stability in the Kingdom.

In accordance with the provisions of the Law, JODIC carries out two principal mandates: deposit insurance and bank liquidation. JODIC serves as the liquidator and the sole legal representative, of any bank whose liquidation has been decided the Central Bank of Jordan (CBJ). In addition, the Amending Law No. 8 of 2019 empowers the Corporation—subject to the approval of the CBJ—to take one or more resolution measures stipulated in its Law whenever such action is determined to be less costly than pursuing liquidation. JODIC also has supervisory powers and authorities granted by its Law, including participation in joint inspection teams with the CBJ, in addition to examining banks’ closing financial statements and the results of their operations available at the CBJ.

The Corporation is primarily financed through annual membership fees levied on banks, in addition to returns generated from investing its funds in accordance with the approved investment policy. When necessary, it may also borrow directly or issue debentures to ensure the timely fulfillment of its legal obligations. In managing its resources and operations, JODIC adheres to the principles of good governance, transparency, and disclosure.

JODIC continuously develops its institutional infrastructure, strengthens its human and technological capacities, and enhances its operational readiness. Simultaneously, it promotes public awareness of depositors’ rights and of JODIC’s vital role within the national financial safety net. Through these sustained efforts, JODIC advances its institutional mission and vision, while reinforcing public confidence in the stability and soundness of the banking system.

JODIC's Vision

A leading deposit insurance corporation in digitalization of all relevant operations at the regional and international levels.

JODIC's Mission

Protecting depositors by insuring their deposits, thereby promoting savings, enhancing confidence in the banking system, and contributing to maintaining banking and financial stability in the Kingdom.

JODIC's Objectives

The Corporation aims to protect depositors by insuring their deposits with the banks according to the provisions of JODIC’s Law in order to encourage savings, enhance confidence in the banking system, and contribute to maintaining banking and financial stability in the Kingdom.

The Corporation's main objectives are:

To provide full protection for the vast majority of depositors in the banking system.

To exhibit a high level of financial capacity, and operational readiness, and to build up an adequate level of reserves.

To manage the reimbursement and the liquidation processes efficiently and effectively.

To contribute to the resolution of any bank that faces problems with core effect on its financial position.

To contribute in raising risk management awareness culture in the banking sector.

To promote public awareness of the deposit insurance system in the Kingdom.

JODIC's Main Features

Public Policy Objectives:

Protecting depositors with banks in the banking system by insuring their deposits according to the provisions of JODIC’s Law no. (33) of the year 2000 and its amendments in order to encourage savings, enhance confidence in the banking system,and contribute to maintaining banking and financial stability in the Kingdom.

Governance Structure:

The Corporation enjoys a legal entity status with financial and administrative independence.

The Corporation is managed and supervised by a Board of Directors:

The Governor of the Central Bank of Jordan (Chair)

Deputy of the Governor of Central Bank of Jordan.

The Secretary General of the Ministry of Finance.

The Controller of the Companies at the Ministry of Industry and Trade.

The JODIC’s Director General.

Two members appointed for three years by a decision of the Council of Ministers, these two members must not be executives of any bank during the period of their membership on the Board and for the twoyears following the termination of their membership.

Membership:

The provisions of JODIC’s Law shall apply to Jordanian banks and branches of foreign banks operating in the Kingdom, with the exception of branches of Jordanian banks operating outside the Kingdom. .

Mandates:

Depositors’ Reimbursement:

The insurance sum becomes payable if the Central Bank of Jordan (CBJ) decides to liquidate a bank according to Banking Law.

Liquidation:

The Corporation is the liquidator and the sole legal representative, of any bank whose liquidation has been decided by the CBJ.

The Corporation must complete liquidation proceedings within two years from the date on which the liquidation decision is issued, and it may be extended for one year. In exceptional cases and for justified reasons, this period may be extended in the same manner for additional periods.

Banking Supervision:

The JODIC may examine banks’ annual financial statements available at the CBJ.

Based on JODIC’s request and the CBJ’s approval, a joint inspection team comprising of employees of the Corporation and the Central Bank may be formed to review or examine the operations, records, and statements of any bank.

Banks' Resolution:

granted the Corporation additional powers to resolve a bank facing material financial difficulties by taking one or more of the measures listed below, if it determines that such action is less costly than proceeding with liquidation:

1- Bear the financial cost of the bank's merger with another bank, or transfer all or some of its assets, rights, liabilities and obligations to a third party.

2- Subscribe to any new shares issued to increase the bank's capital.

3- Apply for a bridge bank license to which all or some of the bank's assets, rights, liabilities and obligations are transferred.

The Corporation shall, with the approval of the Central Bank, participate in any committees formed by the Central Bank to study the conditions of that bank in order to enable it to take the most appropriate and cost-effective decision.

The Coverage Scope & Limit:

The Limit: The maximum amount which an eligible depositor can be reimbursed by JODIC when a bank is liquidated. The coverage limit is up to JD 50,000^[1](fifty thousand) per depositor per bank.

Currency: Jordanian Dinar.

Eligible Deposits: All deposits Except the following :

Government deposits.

Interbank deposits.

Cash collaterals within the limits of the value of the extended facilities guaranteed by the said collaterals.

The Corporation’s Capital:

The sum of JD 1 million, which is paid by the Government, a JD 150,000 of JODIC’s capital considered as a part of the Government's contribution to the Corporation’s capital to establish the Deposit Insurance Fund for Islamic Banks.

A non-refundable initiation fee of JD 100,000 is paid by any bank other than an Islamic bank

Financial Sources:

Annual premiums paid by JODIC’s member banks.

The returns on the investments of the Corporation’s funds.

Any financial grants given to the JODIC with the approval of the CBJ’s Board of Directors, and the Council of Ministers' approval if the grant is given by a non-Jordanian agency.

Any loans obtained by the corporation in accordance with the provisions of this law

Any refunds received by the Corporation from liquidation processes or as a result of any of the procedures stipulated in the JODIC’s Law.

Investment of the Corporation's Funds:

JODIC invests its funds in Government securities or deposits with the Central Bank by a decision of its Board of Directors.

JODIC’s Reserves Target Ratio:

The Corporation must act to build up reserves amounting to 3.0% of total eligible deposits.

[1] According to the provisions of Article 32 (d) of JODIC’s Law, the coverage limit has been increased from JD 10,000 to 50,000 effective 1st of January 2011 based on the Cabinet decision dated Dec 5, 2010.