Deposit insurance is a kind of policy insurance that insured deposit-taking financial institutions (hereinafter referred to as insured institutions) take out from the Central Deposit Insurance Corporation (CDIC), for which they pay a premium. The depositors don’t need to pay any insurance premiums. If the insured institution has been ordered to close by the competent authority, CDIC will compensate each individual depositor for deposit up to the maximum coverage limit- NT$3 million, thereby protecting the depositors’ rights and interests and maintaining financial stability.

Last updated 2015/03/16

Deposit-taking financial institutions differ from most industrial and commercial enterprises in that they depend mainly on depositors for their working capital. If a financial institution is unable to pay off its deposit liabilities due to operational problems or business failure, it may cause depositors’ great losses. Deposits come from their daily hardworking efforts and mostly serve for supporting their retirement lives. The government has therefore established the deposit insurance mechanism, under which CDIC is entrusted to provide statuary safeguards for small depositors so as to maintain financial and social order.

Last updated 2015/03/16

Deposit-taking financial institutions play an important role in adjusting the supply and demand of market capital and promoting economic development. They accept deposits, which are a highly liquid form of short-term liabilities, yet most of their assets are tied up in long-term illiquid instruments. Financial institutions therefore have difficulties in realizing their assets in short term, when their business runs into problems, so depositors can lose confidence, and trigger a bank run. The limited liquidity of financial institutions also encourages a perception among depositors that making an early withdrawal is the only way to get their money back. This sentiment may exacerbate the bank run and also have a chain reaction that leads to runs on other banks as well. The government established the deposit insurance system by law to prevent this by providing guarantee of deposit repayment to the great majority of depositors. Furthermore, in accordance with financial supervision policy and the Deposit Insurance Act, the government is strengthening controls of insurance risk for insured institutions. In doing so the system also prevents systemic risk and ensures the stability of the financial system.

Last updated 2015/03/16

CDIC is a government-owned institution established on September 27, 1985, with capital jointly invested by the Ministry of Finance (MOF) and the Central Bank (the share rights held by MOF were transferred to the Financial Supervisory Commission in 2011 after approval from the Executive Yuan) as the only institution in Taiwan exclusively in charge of managing the deposit insurance system. It is a state-owned corporation. 
                                           
Last updated 2015/03/16

(1) Different purpose: The purpose of deposit insurance is to protect the rights and interests of depositors, maintain credit order, and promote the sound development of the financial industry. It is designed to serve the public welfare with no profit-earning motive. Property and life insurance, on the other hand, are commercial types of insurance.
 
(2) Different premium payers and beneficiaries: Under the deposit insurance system, insured institutions pay insurance premiums to CDIC, which uses these funds to protect the depositors of the insured institutions. The depositors don’t need to pay anything. If an insured institution goes out of business or is unable to pay its deposit liabilities, CDIC will reimburse the depositors of the failed institutions by law. The applicant (the insured institution) therefore is different from the beneficiaries (the depositors holding the deposits within coverage limit). With property and life insurance policies, the insured party has to pay the premium and can designate itself or another party as the beneficiary. When an insurance incident occurs, the insured party or beneficiary of a property or life insurance will claim compensation from the insurance company. The insured party can also be the beneficiary.                  
 
(3) Different functions: With property and life insurance, claims are paid by the insurer after an insurance incident. Deposit insurance claims are also paid after an insurance incident. However, the deposit insurance system in Taiwan also takes active measures to keep such insurance incidents from occurring. When a financial institution experiences business problems or seriously financial deterioration, CDIC uses the Financial Early-Warning System and other off-site monitoring mechanism in coordination with competent authorities’ related financial supervisory measures, to thereby help the insured institution return to sound operations.
 
(4) Different policy role: Deposit insurance also plays a policy role as part of the financial safety net. According to the Deposit Insurance Act, in addition to fulfilling deposit insurance responsibilities toward the insured institutions which are unable to perform their deposits payment obligations or deemed that they have to exit from the market in accordance with the Banking Law, the deposit insurance system helps the government to establish mechanisms for smoothly withdrawing problem financial institutions from the market in order to effectively prevent the occurrence of systemic risk.
 
Last updated 2015/03/16

1.In order to help the public easily identify insured status, all insured institutions reviewed and approved by CDIC shall, according to the Deposit Insurance Act, prominently display at their places of business a large CDIC Membership sign stating that they are insured by CDIC.

2.Depositors can contact CDIC at 0800-000-148 or the information can be accessed from the CDIC website at http://www.cdic.gov.tw.

Last updated 2015/03/16

(1) According to provisions in paragraph 1, Article 13 of the Deposit Insurance Act, the maximum insurance coverage limit provided by CDIC for each depositor at insured institutions is determined by the competent authority (the Financial Supervisory Commission) in conjunction with the Ministry of Finance and Central Bank.
 
(2) On January 1, 2011, the insurance coverage limit was increased to NT$3 million. The coverage limit is the maximum amount of principal and accrued interest for each depositor at each insured institution covered by the deposit insurance which coverage includes deposits both in New Taiwan dollars and foreign currencies. All payouts made by CDIC are paid in New Taiwan dollars. For employee pension accounts opened by organizations, business entities or groups at insured institutions, if the account records clearly distinguish the amount of each employee's pension deposits, and if the insured institution has paid deposit insurance premium for each account individually, the pension deposits of the individual employees and other deposits by such an employee at the same insured institution shall each receive additional coverage under the limit of NT$3 million.
 
Last updated 2015/03/16

According to Article 12 of the Deposit Insurance Act, deposit types eligible for deposit insurance coverage include local and foreign currencies within the territory of the Republic of China (Taiwan). 
 

Last updated 2015/03/16

The account records for the employee retirement savings accounts of agency, business unit or organization at insured institutions have to clearly distinguish each employee's retirement savings deposits. In additions, the insured institution pays a deposit insurance premium on each sub account and provides a ledger book record. Then the retirement deposits of individual employees and the other deposits of those employees at the same insured institution each receive the protection up to the maximum coverage limit.

Last updated 2015/03/16

(1) Article 12 of the Deposit Insurance Act stipulates that deposit insurance covers "deposits within the territory of the Republic of China (Taiwan)." It does not include deposits received by the overseas banking units (OBUs) of banks.
(2) Deposits received by the overseas branches of domestic banks in foreign countries or mainland China are not deposits within the territory of the Republic of China (Taiwan) and therefore are not covered by deposit insurance.

Last updated 2015/03/16

The following types of depositors who hold or open a deposit account are covered by deposit insurance:
1. Natural persons 
2. legal entities 
3. Sole proprietorship and partnerships 
4. Inheritees
5. Bankrupt or liquidated consortia
6. Unincorporated groups or organizations 
7.Various levels of government agencies and their subsidiary agencies (institutions). 
8. Trust estates 
9. Holders of electronic stored value cards issued by insured institutions.
Last updated 2015/03/16

(1) Individuals and sole proprietorship companies are both considered depositors under the deposit insurance system. Therefore accounts opened separately in the name of an individual and a sole proprietorship company are each separately covered by deposit insurance.
(2) For example: If "John Smith" opens two deposit accounts at an insured institution under the names of "John Smith" and "John Smith Inc," each of the two deposit accounts is separately protected up to the maximum deposit insurance coverage limit.
Last updated 2015/03/16

The deposits of a deceased depositor are protected by deposit insurance according to law under the name of the depositor (inheritee) until inheritance procedures are completed.

Last updated 2015/03/16

(1) In general, unincorporated groups or organizations are actually engaged in social activities and are usually formed by many people. They have an organization, name, objective, place of business or office. Moreover, they have designated a representative or manager to externally conduct their activities. However, they have not registered as a corporation. Examples of such entities include apartment building (community) management committees, guilds, clan associations, hometown associations, alumni associations, student associations, school clubs, etc.
(2) It is a common practice for the deposit account of an unincorporated group or organization to be opened in the name of the entity with the name of the entity's person in charge (For example: "XX County Townsmen Association John Smith"). The deposits are protected by deposit insurance under the name of the unincorporated group or organization. If the entity's person in charge ("John Smith" in this example) has a personal deposit account, it is separately covered by deposit insurance and not aggregated with the entity's account. 
Last updated 2015/03/16

The general deposits held by various levels of government agencies and their subsidiary agencies (institutions) are, with the exception of government treasury deposits, protected by deposit insurance.

Last updated 2015/03/16

(1) When a principal consigns assets to a trustee and forms a fiduciary relationship and the trustee deposits the trust estate in a deposit account at an insured institution, such deposits are covered by deposit insurance.
(2) For example: "John Smith" signs a trust deed with a law firm and opens a deposit account under the name of "XX Lawyer Trustee John Smith Trust Property Account."

Last updated 2015/03/16

(1) The separate trust property deposit accounts opened by a trustee are considered separate trust property deposits and therefore are each individually protected by deposit insurance. For example, if the Trust Department of Bank A (the trustee) establishes trusts with Principals A and B (the principals), respectively, and separately opens two deposit accounts (in the names: "Bank A Trust Property Account－Principal A" and "Bank A Trust Property Account－Principal B"), the two deposit accounts are each separately protected by deposit insurance.
(2) In the above-mentioned situation, if accounts are aggregated and there are passbook deposits and time deposits, then the aggregated account will be protected by deposit insurance.

(3) If the principals in the above example have other personal deposits, and those deposits are not aggregated with the trust property deposits, the two deposit accounts are separately protected by deposit insurance.

Last updated 2015/03/16

(1) An electronic stored value cards issued by an insured institution is an electronic stored value cards using electronic, magnetic or optical means to store monetary value to pay for products and services provided by third parties other than the issuer and serve multiple payment purposes and which are issued by a CDIC insured institution.
(2) Electronic stored value cards must be issued by a CDIC insured institution to be protected by deposit insurance. The issuer must also by law set aside a reserve in for money received in advance in connection with the electronic stored value cards issued. The amount of deposit insurance coverage is based on the balance of each electronic stored value card.

(3) The currently popular co-branded EasyCard (a kind of electronic stored value cards for payment on public transport services) combining the functions of a credit card and EasyCard are jointly issued by CDIC insured institution and the EasyCard Corporation. The law requires EasyCard Corporation to hold the stored value balance in trust or obtain a bank's full performance bond (not the reserve set aside by the CDIC insured institution by law). Therefore, such funds in the EasyCard credit card are not covered by deposit insurance.

Last updated 2015/03/16

(1) CDIC handles deposit reimbursement for joint accounts opened by two or more people in a joint name (commonly known as a joint account) according to the following method:
1. if joint account holder and insured institution stipulate in the deposit contract the deposit holding ratios of each joint account holder, reimbursement will be made according to the contractually agreed holding ratios;
2. If the holding ratios are not stipulated in the contract, then the amount will be divided equally by the number of joint account holders and aggregated with the amount of the joint account holders' individual deposit accounts at the same insured institution.

(2) For example: X and Y, open a joint account at Bank A and do not stipulate their respective holding ratios in the deposit contract. Furthermore, X and Y also have individual deposit accounts at Bank A. Bank A subsequently goes out of business. In the accounts of Bank A on its last business day, the amount of the X-Y joint deposit account (the total of principal and interest, same below) is NT$5 million; the amount of X's individual deposit account is NT$1.5 million; and the amount of Y's individual deposit account is NT$0.3 million. When handling reimbursement, CDIC divides the amount of the joint deposit account equally by the number of account holders: in this case NT$2.5 million for each X and Y, and aggregates this with the joint account holders individual deposits. In this scenario, X's deposits total NT$4 million and CDIC reimburses NT$3 million, while Y's deposits total NT$2.8 million and CDIC reimburses NT$2.8 million.

(3) In this example, depositor X has an uninsured deposit amount of NT$1 million which is not reimbursed. Depositor X may receive a fund distributed from the receiver during the process of liquidating Bank A and the amount of funds depend on the asset disposition status.

Last updated 2015/03/16

(1) The principal received from a structured product offered by a bank, whether or not the principal is fully or partially guaranteed, is not considered a deposit and is not protected by deposit insurance.
(2) Deposit insurance covers "deposits" at insured institutions. Other financial products, such as gold, mutual fund, equity stock or other investment-linked products, whether or not they are advertised as principal guaranteed products, are not considered deposits and are not protected by deposit insurance.

Last updated 2015/03/16

When an insured institution is ordered to close by the competent authority or the central competent authority of the agricultural finance, CDIC shall fulfill its insurance responsibilities by any of the following methods:
(1) Make payout by cash, remittance, transfer or other payment methods to reimburse depositors of the failed institution (cash payout).
(2) Consult with other insured institutions to make payout on behalf of CDIC (deposit transfer).
(3) Facilitate other insured institutions or financial holding companies to acquire or assume all or part of the businesses, assets and liabilities of the closed insured institutions.
The estimated cost to CDIC of carrying out the measures outlined in Paragraph 2 or 3 above shall be less than the estimated loss arising from the payout subject to Paragraph 1.
 
Last updated 2015/03/16

(1) While an insured institution is ordered to close its business, depositors don’t need to calculate payout amounts by themselves, it is the CDIC who has to send the deposit payout related information to depositors by post mail or email.

(2) When CDIC fulfills its insurance obligations through cash payout or deposit transfer, the amount reimbursed to each depositor shall be calculated based on the amount of insured principal and interest recorded in the account on the last business day of the closed insured institution, after aggregating accounts for all of the deposits (including foreign currency) and other creditor rights and liabilities of the depositor, up to a maximum coverage of NT$3 million. However, if a depositor has liabilities created by deposits pledged as collateral of the closed insured institution or liabilities reaching due or deemed to be due according to the applicable agreements, or liabilities fit to be offset in accordance with other laws and regulations, CDIC may offset the claims of depositors of a closed insured institution according to the following order before handling any payout according to the above mentioned method of calculating the reimbursement amount.

(3) In aggregating accounts as mentioned above, if the head office and branch (or internal unit) of a depositor both have deposit accounts at a closed insured institution, the reimbursement amount shall be calculated based on the consolidated deposit accounts of the branch (or internal unit) and main office.

(4) If the creditor's rights and debts of a depositor and debts are denominated in foreign currency, such funds shall be calculated in New Taiwan dollars based on the exchange rate on the last business day of the closed insured institution.

(5) When CDIC successfully encourages another institution to acquire or assume closed insured institutions, and if the transaction scope of the acquisition extends to all operations, assets and liabilities, then the depositor rights and interests do not change and the acquiring institution will continue to handle all follow-up deposit and other businesses. If the transaction scope only extends to a part of the operations, assets and liabilities, then the deposit amounts assumed by the acquiring institution shall, at the very least, be calculated according to the aforementioned method.

(6) For example: Company X is a depositor of Bank A. Bank A has been ordered to close and CDIC is carrying out a cash payout. Based on the account records of Bank A on its last business day, Company X (the Parent) has principal and interest on time deposits at Branch a of Bank A totaling NT$10 million; overdue loans or unpaid loans meeting offset conditions amounting to NT$6 million; and an NT$8 million pledge with Bank A collateralized by a certificate of deposit. Company X's subsidiary has a foreign currency deposit account at Branch b of Bank A with the conversion equivalent of NT$5 million in principal and interest. When CDIC calculates the payout amount for Company X, at first it aggregates the creditor's rights and liabilities of Company X in both the Parent and the Subsidiary. The deposit amounts total NT$15 million, while the liabilities total NT$14 million. Then, CDIC offsets the NT$8 million pledge from the NT$10 million time deposit, leaving NT$2 million plus a foreign currency amount of NT$5 million. At last, from this total NT$7 million deposit amount, the NT$6 million in overdue liabilities is eliminated, leaving an offset deposit amount of NT$1 million. CDIC therefore should reimburse NT$1 million.

Unit: NT$10,000

Last updated 2015/03/16

When a failed insured institution is acquired by another financial institution in the course of CDIC's fulfillment of insurance obligations under the Deposit Insurance Act, the deposits of depositors at the failed insured institutions are generally assumed by the acquiring or assuming institution and become deposits at the institution. If a depositor originally has other deposits at the acquiring or assuming institution, the two accounts are aggregated by CDIC and covered by deposit insurance up to the maximum coverage limit of NT$3 million. 
Last updated 2015/03/16

If the insured status of an insured institution is terminated by CDIC Taiwan, the deposits of its depositors are still protected against the occurrence of insurance incidents for up to half a year from the day that the insured status of the institution ends. The amount of insured deposits is calculated as the lowest deposit amount at the end of the business day between the period of contract termination and the final business day of the institution, up to a limit of NT$3 million. Deposits in the institution are no longer protected by CDIC Taiwan after one half year from the date of agreement termination.
 
Last updated 2015/03/16

Insured and uninsured deposits of a farmers' or fishermen's association

Last updated 2015/03/16

(1) Under the Banking Act, the competent authority currently requires financial institutions to regularly disclose its financial and business conditions. Financial and business information for individual insured institutions can be accessed by the public from the institution's external website and public disclosed information.
(2) To assist depositors obtain important financial information on insured institutions, CDIC also provides links on its website to competent authorities and the financial disclosure links of insured institutions. (From the Chinese version of the CDIC website http://www.cdic.gov.tw click the "承保風險管理動態" or "要保機構" links).
Last updated 2015/03/16

CDIC's powers of general financial inspection of insured institution were transferred to the Financial Supervisory Commission after the commission's establishment in 2004. In accordance with Article 24 of the Deposit Insurance Act Article 24, CDIC currently conducts statutory special inspections related to deposit insurance operations at insured institutions.

Last updated 2015/03/16

(1) CDIC performs deposit insurance operations in accordance with the Deposit Insurance Act, its enforcement regulations and other related laws.

(2) Laws and regulations related to deposit insurance can be accessed from the "Laws & Regulations" section of the CDIC website (http://www.cdic.gov.tw). Further information is also available from the site's Q&A section. 

Last updated 2015/03/16

(1) For quick answers to your questions, call our toll-free service line and interactive automated voice response system at: 0800-000-148
(2) Information on the deposit insurance system can be accessed from the CDIC website at: http://www.cdic.gov.tw
 
Last updated 2015/03/16