In 1998, the President of Ukraine signed the Decree «On Measures to Protect the Rights of Physical Persons as Depositors of Commercial Banks in Ukraine» which approved the establishment of the Deposit Guarantee Fund and procedures regulating the use of the Fund’s resources. The Decree also established that the depositors could be reimbursed for the deposits to the commercial banks from the date of the deposits inaccessibility at the amount of UAH 500.00.
On September 20 2001, the Verkhovna Rada (Parliament of Ukraine) approved the Law «On Deposit Guarantee Fund», which took effect on October 24, 2001. According to the Law the Fund guaranteed reimbursement of the deposits including the interest accrued for every depositor to the Fund member (temporary member) banks at the amount of UAH 1200. The coverage amount could be increased by the decision of the Administrative board of the Fund depending on the market trends.
The system of deposit guarantee in Ukraine operates according to the Law of Ukraine «On Households Deposit Guarantee System» of February 23, 2012, Ref. number 4452-VI.
The Fund is a specialized government institution of public administration in the sphere of deposit guarantee and bank resolution.
The Fund is established with the purpose of protecting the rights of individual depositors (natural persons) to the banks in Ukraine.
The major objective of the Fund is to ensure the functioning of the household deposit guarantee system and insolvent banks resolution.
To exercise its main objective, the DGF shall exercise the following functions as prescribed by this Law:
1) maintain a register of the DGF participants;
2) accumulate funds from the sources determined by Art. 19 of this Law, and control the completeness and the timeliness of each DGF participant’s contributions payment;
3) invest the DGF funds in the government securities of Ukraine;
4) organize deposits payout in case if a decision regarding the withdrawal of the banking license or liquidation of a bank is made;
5) regulate the participation of banks in the household deposits guarantee system;
6) take part in inspections of problem banks upon a proposal of the National Bank of Ukraine;
7) apply financial sanctions and impose administrative fines to banks and their managers;
8) resolve insolvent banks i.a. through the provisional administration and liquidation of banks, transfer assets and liabilities of an insolvent bank, sell an insolvent bank, or establish and sell a bridge bank.
9) audit banks to ensure their compliance with the household deposits guarantee system legislation;
10) provide financial support to an assuming bank;
11) forecast potential costs of the DGF for insolvent banks resolution and deposits payout.