Legislators pass JODIC law, stipulating mandatory deposit insurance for Islamic banks

AMMAN — The Lower House on Tuesday passed the 2019 amendments to the Deposit Insurance Corporation Law.

Under the amended law, the membership of Islamic banks in the Jordan Deposit Insurance Corporation (JODIC) would be changed from optional to mandatory.

A fatwa (religious edict) issued recently allowed insuring Islamic deposits to provide protection for all depositors at banks.

The bill, which includes Islamic banks under the JODIC's insurance umbrella in accordance with Sharia (Islamic law) also enables the corporation to manage troubled banks in accordance with the new amendments to the law.

According to a statement carried by the Jordan News Agency, Petra, the amendments also seek to strengthen confidence in Jordan’s banking system. These amendments allow the payment of due insurance fees on behalf of the depositors, without conditionally claiming them. 

The bill stipulates the establishment of a fund in the Islamic banks with a JD150,000 grant from the JODIC as a governmental contribution. 

Banks present annual statements to the JODIC and Central Bank of Jordan on their total deposits under the law, Petra reported.

The bill exempts Islamic banks from paying the annual subscription fees, which stand at 0.0025 per cent of total deposits, according to Petra.