Funds of Legal Entities in Banks Should Be Attributed to Insured Deposits - Expert

In contrast to the depositors with insured funds in banks, the entrepreneurs are virtually defenseless in the event of the closure of the bank, which kept their money.

Bank funds of legal entities and individuals engaged in entrepreneurial activities legislation actually include a category of uninsured funds in the bank.

The law "On Banks" 82 article stipulates the order of payments in case of bank failure. The list of legal entities is included in the category of unsecured creditors, and they are in the penultimate place in the list, which should be compensated.

According to regulations, 82nd Article shall apply in the event of a bank failure of the law "On Banks". In the case of the forced closure of the bank the court shall decide within 60 days and determine the sequence of the refund.

This means that the entrepreneur in the best case for 60 days is deprived of his means, in the meantime experiencing difficulties with the issue of wages, payment of expenses and in general with entrepreneurial activity. That is, its activity is paralyzed.

The Deposit Insurance Fund official website also stated that the funds of individuals engaged in entrepreneurial activities are uninsured deposits.

A striking example of this was the insurance company Azergarant, which had about 2 million manat in the closed Atra Bank.

The company Chairman Rashad Mammadov said that in this regard, they are forced to stop their activities and no longer trust the banking system.

Commenting this for Turan, the economist Vugar Bayramov noted that this is a gap in the law, which many do not pay attention.

"Bank funds of legal entities and physical persons engaged in entrepreneurial activity should definitely be considered as the contribution insured. In the event of bankruptcy or forced closure of the bank means entrepreneurs must be returned immediately, so as not to create problems in their future endeavors, "he said.

According to him, this situation is forcing entrepreneurs to immediately cash out their banking agents, and they are not interested in having to keep their money in banks.

"It is unfair to businesses. They pay the bank for servicing their account, they have no dividends from their funds in banks, the bank uses their finance in its activities and in the case of bank closures the entrepreneur loses his money by circumstances beyond his control," Bayramov said.

The expert stressed that the legislators and the relevant agencies should pay attention to this gap and to remedy the situation. In the meantime, the current rules in force, he advises entrepreneurs to diversify their assets and keep them in several banks. -71B-