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Glossary

A

Account Balance

The dollar amount including principal and interest for a specific account.

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Assessment Base

The base on which the deposit insurer charges the premium or calculates the levy needed to compensate the insured depositors.

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B

Bank Draft

A cashable instrument, similar to a certified cheque or money order, that is drawn by a bank against its own funds and payable to the person named in the draft.

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Bank run

A rapid loss of deposits precipitated by fear on the part of the public that a bank may fail and depositors may suffer losses. Could spread across the banking system.

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Beneficiary

A person or entity named or identified in either the bank account records or in a written trust that will have an interest in the trust upon the account owner's death.

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Bond

A debt instrument issued by a government, or by a bank or other corporation. Bonds normally pay fixed interest rates and may be redeemable on demand or at the end of a fixed term.

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Bye-law

A rule put in place by a corporation or organization under authority granted to it by a higher law. For example, the DIC is allowed by the DIC Act to pass by-laws that apply to its member institutions or others involved in the placement of deposits.

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C

Cashier's Check

A check drawn on a bank. It is considered a deposit and eligible for deposit insurance coverage.

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Certificate of Deposit (CD)

A savings instrument, also called a time or fixed deposit, that pays interest for specific period of time (term), at either a set or variable interest rate, and which is redeemable upon maturity. A CD is a deposit type, not an account ownership category. The amount of coverage available to the owner of a CD depends on the ownership category (single, joint, trust, IRA) in which the CD is held and what other deposit accounts the owner holds in that same category at the same bank.

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Checking Account

A deposit account that allows the depositor to write cheques instructing the member institution to withdraw funds from the account and pay them to the persons named in the cheques. A chequing account may or may not pay interest.

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Claim

An assertion of the indebtedness of a failed institution to a depositor, general creditor, subordinated debt holder, or shareholder.

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Closed Institution

An institution (a) which has been ordered by the Central Bank to suspend business as a result of financial difficulties; (b) which has been the subject of a winding-up order issued by the Court; and (c) the failure of which the Central Bank has advised the Deposit Insurance Corporation.

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Corporate governance

The system by which an organization is directed, administered or controlled, and includes the relationships among stakeholders and the goals for which the organization is governed.

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Corporation

An incorporated business that includes both for-profit and not-for-profit entities. Corporation accounts, together with partnership and unincorporated association accounts, are a separate ownership category for the purpose of calculating deposit insurance.

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D

Debenture

A debt investment issued by a bank or other corporation. Debentures may pay interest at a fixed rate or a floating (variable) rate and may be redeemable on demand or at the end of a fixed term.

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Demand Deposit Account (DDA)

A checking account. DDA is a deposit type, not an account ownership category. The amount of coverage available to the owner of a DDA would depend on the ownership category (single, joint, trust, IRA) in which the account is held and what other deposit accounts the owner holds in that same category at the same bank.

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Deposit

Funds placed with a DIC member institution and eligible for insurance coverage.

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Deposit Account Records

Deposit account records include signature cards, certificates of deposit (CDs), passbooks, account ledgers, and computer records that relate to the bank's deposit-taking function.

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Deposit Insurance

Deposit insurance is a system established to protect depositors against the loss of their deposits in the event an insured institution of the deposit insurer is unable to meet its obligations to depositors. Similar terms such as deposit guarantee or deposit protection are used in some countries.

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Deposit Insurance Corporation (DIC)

The agency created in 1999, under the Protection of Depositors Act, to provide for the insurance of Bahamian dollar deposits, so as to promote the stability and public confidence in the Bahamian financial system.

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Deposit Insurance Fund (DIF)

The fund maintained by the DIC to insure deposits at failed member institutions.

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Deposit Type

The type of transaction account or savings instrument into which funds are deposited. This includes checking accounts, savings accounts and CDs.

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Depositor

A person or entity (such as a corporation) who deposits funds at a DIC member institution.

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DIC Member Institution or Member Institution

Banks in The Bahamas that take wholly or in part Bahamian Dollar deposits.

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E

Eligible Deposits

Deposits that are eligible for insurance under the DIC Act. To be eligible, a deposit must be in a certain type of account or product (including but not limited to a savings, chequing account or fixed deposit account), held at a DIC member institution and in Bahamian dollars. There are other rules that apply as well for the deposits to be eligible.

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Ex ante (Before) Funding

The prior accumulation of a fund to cover deposit insurance claims, in case of the failure of a DIC member institution.

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Ex Officio

Holding a second position or office by virtue of being appointed to a first.

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Ex post (after) Funding

An assessment levied after the failure of a DIC member institution to provide funds to cover eligible claims.

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F

Failure

A failure occurs when an institution business becomes insolvent or is in immediate danger of insolvency.

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Financial safety net

A financial stability mechanism that usually comprises the deposit insurance function, prudential regulation and supervision, and the lender-of-last-resort function.

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Flat Rate Premium

A premium assessed at a uniformed rate across all DIC member institutions.

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Foreign Currency Deposit

A deposit held in a currency other than Bahamian dollars.

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I

Individual Account

An account held in the name of one person that does not name beneficiaries.

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Insolvency or Insolvent

When a bank can no longer pay any financial obligation when due, or the value of assets is less than the total of its debts.

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Insurance Amount

The basic DIC insurance amount is B$50,000 per depositor, per bank, per ownership category. Deposits held in different ownership capacities and rights, such as single, joint, and trust, are separately insured, when the requirements for each ownership category are met, even if held at the same bank.

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Insured Deposits

Types of deposits that are covered by a deposit insurance system.

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Inter-bank Deposits

Deposits held in a bank for another bank.

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J

Joint Account

A deposit account owned by two or more people, with equal withdrawal rights, that is not a trust account. Joint accounts are a separate account ownership category, and can qualify for separate DIC insurance cover.

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L

Lender-of-last-resort function

The provision of liquidity to the financial system by a central bank.

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Letters of Credit

Credit instruments issued by a bank guaranteeing payments on behalf of its customers to a beneficiary normally to a third party, but sometimes to the bank’s customer, for a stated period of time and when certain conditions are met.

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Liquidation

The winding down of the business affairs and operations of a failed DIC member institution through the orderly disposition of its assets after it has been placed in receivership.

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Liquidator

Person authorized, normally appointed by the courts, to represent the bank in liquidation, to manage its affairs and to conduct activities for collecting its claims, discharging its debts to the creditors of collected funds, allocating the remainder of its assets among the shareholders and winding up its activities.

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M

Maturity Date

The date at which a term deposit becomes due.

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Maximum Coverage

The amount a depositor can claim from the deposit insurer in the event of bank failures.

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Money Order

A cashable instrument, similar to a certified cheque or a bank draft, issued by a member institution or a postal authority and payable to the person named in the order.

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P

Partnership

An association of two or more persons or entities formed to carry on as co-owners of an unincorporated business. Partnership accounts, together with corporation and unincorporated association accounts, are a separate account ownership category.

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Payout

The process undertaken by DIC to make deposit insurance payments to the insured depositors of a failed DIC member institution. DIC may make a payment of deposit insurance in one of two ways: (1) by issuing cheques to insured depositors; or (2) by providing insured depositors with new demand deposits at another DIC member institution.

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Preference shares

A class of Capital Stock that pays dividends at a specified rate that has preference over common stock in the payment of dividends and the liquidation of assets.

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Protection of Depositors Act

The Act passed by Parliament creating the Deposit Insurance Corporation, detailing its powers, and defining its corporate mission.

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Public Corporation

A corporation established and owned by the government to fulfill a public policy objective. The Deposit Insurance Corporation is a Government corporation.

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R

Right and Capacity

The terms “right” and “capacity” refer to the nature of the ownership of deposits, such as jointly owned funds, trust deposits, deposit held in individual names, etc.

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S

Savings Account

A bank deposit that can be withdrawn at any time. Savings accounts pay interest and depositors are not able to write cheques on them.

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Securities

Financial instruments such as bonds, notes, debentures, Treasury bills, stocks and mutual funds.

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Set-off

Refers to situations where the claim of a creditor in an insolvent bank (for example, a deposit) is deducted from a claim of the bank against the creditor (for example, a loan).

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Single Account

An account in the name of one individual with no named beneficiaries. Single or individual accounts are a separate account ownership category.

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Sole Proprietorship

An unincorporated business in which all assets are owned by one person. Sole Proprietorship accounts are insured in the single account category, as the personal deposits of the owner. The phrase “Doing Business As” (DBA) in the account title usually signifies that the account is held by a sole proprietorship.

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Standby letters of credit

Contingent obligations of the issuing bank to make payment to the designated beneficiary if the bank’s customer fails to perform as called for under the terms of the contracts.

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Subordinated Debt

A debt instrument that ranks lower than another instrument in the priority of its claim on the issuer's assets.

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Subrogation

The process where the DIC is substituted as the claimant for the insured deposits paid by it.

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T

Term Deposit

A deposit that is due at the end of a fixed term. A term deposit may pay interest at a fixed rate, at a floating (variable) rate or at an index-linked rate.

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Treasury Bill

A debt investment issued by a government and redeemable at the end of a fixed term - normally, in 90 days, 180 days or 1 year.

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Trust Account

A type of ownership in which a person (the trustee) holds property for the benefit of one or more other persons (the beneficiaries). For example, a trustee may have a deposit account in which they hold money for the benefit of one or more beneficiaries.

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Trustee

Person authorized to transact business on behalf of a trust.

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U

Uninsured Deposit

The part of an eligible deposit that exceeds the B$50,000 insurance limit. Depositors may be able to recoup part of this amount upon the liquidation of the member’s assets.

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What is Deposit Insurance?

In simple terms, deposit insurance provides peace of mind in the unlikely event your bank should experience difficulty and be forced to close. Read on for details on the who and what of the coverage we provide.

Is Your Bank A Member?

Need to know if your bank is a member of the program, and that your funds are insured? Our up-to-date list of member banks will answer your questions.

Got Questions?

Visit our
Frequently Asked Questions
pages for the answers!