The anticipated regulations for the upcoming system in the country has now been released in its draft form.
China has now created the draft regulations for the introduction of a system of bank deposit insurance coverage for the very first time within that country, in one step among many that could be very meaningful in terms of liberalizing its interest rates and to give its financial institutions the ability to compete commercially for customers.
The launch of these draft rules for the insurance program arrived shortly after it was revealed that the system was in the works.
The bank deposit insurance draft rules were issued by the Legislative Affairs Office of the State Council, which is the cabinet in China. The regulations state that the system will provide direct insurance coverage for deposits as large as about $81,395 (500,000 yuan). This was revealed on the official website of the People’s Bank of China, in the form of a notice posted there.
The media has been reporting that this bank deposit insurance will go into effect near the start of 2015.
The Deposit Insurance Act (DIA) is going to provide coverage for the complete bank savings of 99.63 percent of all of the customers who make deposits, said a separate explanation issued by China’s cabinet. The banks in the country have been given a deadline of December 30 in which to provide their feedback on the DIA.
Although the DIA is only starting to make insurance news now, it is actually an issue that the country has been considering for around twenty years. This is because it has been only over the past year that there has been any type of urgent need for this type of system, as the country now seeks to broaden the economic reforms that it has had in place, including the removal of state controls over interest rates.
According to the State Council, by creating a bank deposit insurance system in China, it will “help to better protect the interests of depositors and maintain public confidence in the financial markets and the banking system.” It should be noted that this coverage will not apply to overseas branches of Chinese banks or foreign bank branches with operations within the country.