3. The scope of protection under the savings insurance system
(1)Protection of savings, etc.
The amended Savings Insurance Act of December 2002 specifies the amount of insured savings payable when a cooperative fails from April 2005 onwards. Of savings and others covered by insurance, those coming under savings for payment and settlement (i.e. savings that satisfy the three conditions that they are (1) interest-free and (2) payable on demand, and that (3) a payment service can be provided) are protected in full (a permanent measure). For savings other than these, principal up to 10 million yen, plus interest and other accruals, is protected per depositor per cooperative.
For savings and others covered by insurance not coming under savings for payment and settlement and with principal exceeding 10 million yen, and for savings and others not covered by insurance, plus interest and other accruals, payments are made in accordance with the asset situation of the failed cooperative. As such, these are sometimes partially reduced.
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Savings, etc., covered by savings insurance |
Savings for payment and settlement purposes (Note 1) |
Current savings Non-interest bearing ordinary savings, etc. |
Full protection |
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General savings |
Interest bearing ordinary savings, time savings, savings deposits, call deposits, installment savings, Norinchukin Bank debentures (Ritsuno Wide and other custody products) etc. |
Protection for combined principal up to 10 million yen, plus interest, etc. (Note 2) Portion exceeding 10 million yen paid in accordance with the asset situation of the failed cooperative (subject to deductions) |
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Savings, etc., not covered by savings insurance |
Foreign currency savings, negotiable certificates of deposit, Norinchukin Bank debentures (other than custody products, e.g. Warino and Ritsuno) etc. |
Not subject to protection Paid in accordance with the asset situation of the failed cooperative (subject to deductions) |
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(Note 1) Refers to savings that satisfy three conditions, namely that they are (1) interest-free and (2) payable on demand, and that (3) a payment service can be provided.
(Note 2) The benefit compensation for installment savings is protected in the same way as interest.
(2) Protection of settlement debt
In the December 2002 amendment to the Savings Insurance Act, the full amount of settlement debt was to be protected from April 2003 onwards.
Settlement debt is debt borne by a cooperative in connection with transactions related to capital settlements made by the cooperative (foreign exchange transactions, transactions based on the presentation of bills, checks and others that can be settled in clearing houses, and transactions related to checks drawn by the cooperative in its own name). This would involve, for example, debts arising from transactions in which, although the cooperative has received a request for transfer from a customer before bankruptcy, the funds received from the customer have not yet been moved to the transfer destination.
(Note) In principle, debts arising from transactions outsourced by the cooperative itself or by entities engaged in financial business (*see below) do not fall under settlement debt. However, cases such as debts not related to transactions undertaken by the cooperative as business do fall under settlement debt.
Settlement debt not accounted as savings for payment or settlement is called “specific settlement debt”. For example, this would entail settlement debt accounted as the cooperative’s savings, temporary receipts, etc.
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(*) Entities engaged in financial business Agricultural and fishery cooperatives, banks provided under the Banking Act, long-term credit banks provided under the Long-Term Credit Bank Act, shinkin banks, credit cooperatives, labor banks, the Shinkin Central Bank, the Shinkumi Federation Bank, the Rokinren Bank, and the Shoko Chukin Bank |
