Glossary
A
Account Balance
The dollar amount including principal and interest for a specific account.
Back to topAssessment Base
The base on which the deposit insurer charges the premium or calculates the levy needed to compensate the insured depositors.
Back to topB
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.
Back to topBank 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.
Back to topBeneficiary
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.
Back to topBond
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.
Back to topBye-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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Cashier's Check
A check drawn on a bank. It is considered a deposit and eligible for deposit insurance coverage.
Back to topCertificate 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.
Back to topChecking 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.
Back to topClaim
An assertion of the indebtedness of a failed institution to a depositor, general creditor, subordinated debt holder, or shareholder.
Back to topClosed 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.
Back to topCorporate 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.
Back to topCorporation
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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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.
Back to topDemand 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.
Back to topDeposit 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.
Back to topDeposit 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.
Back to topDeposit 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.
Back to topDeposit Insurance Fund (DIF)
The fund maintained by the DIC to insure deposits at failed member institutions.
Back to topDeposit Type
The type of transaction account or savings instrument into which funds are deposited. This includes checking accounts, savings accounts and CDs.
Back to topDepositor
A person or entity (such as a corporation) who deposits funds at a DIC member institution.
Back to topDIC Member Institution or Member Institution
Banks and Credit Unions in The Bahamas that take wholly or in part Bahamian Dollar Deposits.
Back to topE
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.
Back to topEx ante (Before) Funding
The prior accumulation of a fund to cover deposit insurance claims, in case of the failure of a DIC member institution.
Back to topEx post (after) Funding
An assessment levied after the failure of a DIC member institution to provide funds to cover eligible claims.
Back to topF
Failure
A failure occurs when an institution business becomes insolvent or is in immediate danger of insolvency.
Back to topFinancial safety net
A financial stability mechanism that usually comprises the deposit insurance function, prudential regulation and supervision, and the lender-of-last-resort function.
Back to topI
Individual Account
An account held in the name of one person that does not name beneficiaries.
Back to topInsolvency 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.
Back to topInsurance 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.
Back to topJ
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.
Back to topL
Lender-of-last-resort function
The provision of liquidity to the financial system by a central bank.
Back to topLetters 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.
Back to topLiquidation
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.
Back to topLiquidator
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.
Back to topM
Maximum Coverage
The amount a depositor can claim from the deposit insurer in the event of bank failures.
Back to topMoney 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.
Back to topP
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.
Back to topPayout
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.
Back to topProtection of Depositors Act
The Act passed by Parliament creating the Deposit Insurance Corporation, detailing its powers, and defining its corporate mission.
Back to topPublic Corporation
A corporation established and owned by the government to fulfill a public policy objective. The Deposit Insurance Corporation is a Government corporation.
Back to topR
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.
Back to topS
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.
Back to topSecurities
Financial instruments such as bonds, notes, debentures, Treasury bills, stocks and mutual funds.
Back to topSet-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).
Back to topSingle Account
An account in the name of one individual with no named beneficiaries. Single or individual accounts are a separate account ownership category.
Back to topSole 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.
Back to topStandby 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.
Back to topSubordinated Debt
A debt instrument that ranks lower than another instrument in the priority of its claim on the issuer's assets.
Back to topSubrogation
The process where the DIC is substituted as the claimant for the insured deposits paid by it.
Back to topT
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.
Back to topTreasury 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.
Back to topTrust 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.
Back to topU
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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