What is deposit insurance?

Deposit insurance is a system of protection of depositors against loss of their deposits or part of deposits in case of a bank failure, by providing reimbursement of deposits up to the guaranteed amount and within the timeframe determined by Law.

The objectives of deposit insurance schemes are mainly similar in all countries – to provide fundamental protection to depositors against bank deposit loss and promote financial stability and confidence in the banking system, thus also enabling disposition of failed banks.

Main design features of deposit insurance system in Montenegro:

  • Deposit insurance scheme comprises deposits of citizens and companies, residents and non-residents. All kinds of deposits held with bank under the name of owner are protected, including current, gyro or transaction accounts and savings deposits. Deposits excluded from deposit insurance system are defined by Law, in line with the best international practice.
  • In case of a bank failure, Deposit Protection Fund guarantees to reimburse up to 5000€ to each depositor, regardless of the number and amount of deposits held by the depositor with the bank. The amount to be reimbursed is calculated for each depositor separately, adding up deposits on all accounts held with the failed bank, reduced by total liabilities of depositor to the bank, as registered on the day the bank is declared bankrupt.
  • All banks licensed by the Central Bank of Montenegro are automatically included in deposit insurance scheme, which means that deposits held with all banks in Montenegro are protected.
  • The Deposit Protection Fund is authorized for deposit insurance and reimbursement of insured deposits up to the guaranteed amount, within a timeframe defined by Law, in case of a bank failure.
Deposit insurance service is free for all depositors, both citizens and companies. Banks are obliged to pay initial and annual premiums to the Deposit Protection Fund.