MODALITIES OF SOLUTIONS TO THE PROBLEM OF INSURANCE AND DEPOSIT PAYMENT IN THE BANKS OF SERBIA

Abstract

The problem of decline of business banks in Serbia is ever more pronounced, and the very phenomenon represents a major social damage caused, primarily, by introduction of considerable foreign assets, i.e. the assets of deponents or bank creditors, which they are unable to return, because they are unable to collect payment from those they supplied the assets with. This means that only insured deposits can be charged, while the rest is to be charged through bankruptcy estate in full, i part, or not at all. Their payment is secured by the Insurance Deposit Agency, and in case the Agency is unable to make the payment, those obligations are covered from the state budget, because the state is the guarantor of payments of such obligations. The circumstances which have forced the Agency and the state into covering their obligations are various and in general boil down to: bad business decisions by bank managers in relation to the selection of clients; failure to comply with or a complete absence of quality procedures for granting credit funds; undue and superficial controls of the regulator and the external reviser; and an application of new regulations based on international banking standards. Based on the stated facts, the definition of the problem of insurance and deposit payment in Serbia today should be: “Finding sustainable modalities of sources of funds intended for solving the problem of insurance and deposit payment in the banks of Serbia”. By ascertaining the circumstances of the given period, it has been established that the revenues of the Deposit Insurance Agency were constantly on the rise, due to the growth of the business banks’ deposits. Also, the assets of the Agency and the Deposit Insurance Fund had a constant growth as well; however, at the end of 2012, due to then passed ‘lex specialis’ acts, the Agency and the Fund were deprived of those assets. In order to prevent the scenario of covering insured deposits from repeating in the future, it is necessary to coordinate and amend the existing regulations in relation to: an introduction of providing a membership certificate for deposit insurance; a decrease of the amount of the insured deposit; a revocation of the Agency’s authority concerning credit grants; preventing the steering committee from proposing new ‘lex specialis’ laws and institutionalizing their responsibility for the damaged they caused to the Agency; making all information and bank reports available; external revisions and enabling of off-site and on-site bank controls by a foreign agency; an amendment to the Decision about the classification  of balance assets and off-balance positions of the banks belonging to the National Bank of Serbia; an amendment of the organizational structure of the agency pertaining to investments on the money market and the capital market; a revenue increase through a more aggressive payment collection of demands from the agency’s off-balance and a periodical and temporary increase of the rate of insured deposits premiums.