Information Royal Deposit Insurance Corporation | Alexandrian Monetary Bureau

[Trade and Finance Ministry]

Alexandrian Monetary Bureau:
Royal Deposit Insurance Corporation
A fun policy guide to
Benefits and Premiums by ConsequencesInc

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1. What is the Royal Deposit Insurance Corporation (RDIC)?

The Royal Deposit Insurance Corporation (RDIC) is a program established by the Royal Deposit Insurance Program Act and amended by the RBA Replacement Act that provides insurance protection to depositors in Depository Institutions (aka Banks) to a certain limit set by the Alexandrian Monetary Bureau (AMB).

A Depository Institution is defined as any financial institution which accepts and holds monetary deposits in Alexandrian pounds for its customers.

Currently, the RDIC provides insurance of up to £10,000 for the funds that you have deposited as a particular individual at any particular bank or Depository Institution.

You may be wondering, “Wait, why isn’t it the Royal Deposit Insurance Program like in the Act?” Well because I am an American and the FDIC sounds a lot more cooler than the FDIP. RDIC is therefore better than RDIP. It’s like the difference between Lucky Strikes and Winston's.

2. How does the RDIC Work?

Under the Royal Deposit Insurance Program Act, the MoTF and by extension the AMB is responsible for establishing the Royal Deposit Insurance Fund. This fund is filled by a designated portion of Prune Taxes as well as tax premiums from deposit taking financial institutions, also known as banks. The ultimate goal of the RDIC and its fund is to protect the Alexandrian Citizen who holds money in any Financial Institutions (FIs) that are Depository Institutions.

In cases where the RDIC determines that a FI cannot keep its financial obligations or goes unsolved, the RDIC under the Royal Deposit Insurance Program Act is allowed to take the institution into receivership. Under which, the following actions will be taken in order:
1. Determine the Financial Situation of the Institution, including Assets and Liabilities, to see if the institution can continue operations.

2. Work with Institution Leadership on plan off action, including but not limited to: Repayment Plans with Depositors, Bankruptcy Restructuring, Sale to Another Institution, or Liquidation.

3. Prepare a Government Announcement to announce to the public the Receivership of the Institution and the plan of action, and reassuring depositors of their options.
The Government and Institution will also reach out directly to depositors of note as kept in Bank Records, if applicable.

4. Repayment of Depositors either by:

a. Repayment Plan or Continued Operations Post-Bankruptcy or Sale.​

b. Complete Liquidation of the Institution and its assets to pay depositors.​

c. Creditors will be paid after all depositors are made whole.​

5. The RDIC will maintain a record of the receivership so depositors who are unaccounted for may make claims in the future with proof of deposit, and the RDIC may retain funds or assets from liquidation of an Institution for future claims from unreachable depositors.

6. (Optional) If there is not enough funds to make depositors whole in case of a liquidation of an Institution, the AMB will make all depositors whole either to their original deposit amount or the maximum current RDIC insurance, whichever is less, using funding from one or more of the following sources:

a. RDIC Fund (Preferred)​

b. AMB Reserves (Preferred)​

c. SCGovernment/GovCommerce Funds (If Necessary with Parliamentary/Minister approval)​

d. Issuing FOMO Bonds (If Necessary with Parliamentary Approval)​

3. What are the current RDIC rates for Depository Institutions?
Good question! Currently, for a Depository Institution, they will have to pay a premium on their total outstanding deposits. The following two score calculations are used to determine what rates a Depository Institution has to pay (scores are rounded to the nearest hundredth):

Bank Solvency Index (BSI): Total Assets / Total Outstanding Deposits
Institutional Diversity of Equity (IDE): Total Equity / Total Outstanding Deposits

The Bank Solvency Index Score gives a score of how well an institution could pay off their deposits based on their current assets. A score of 1 or more means the institution has enough assets on the books to theoretically pay back all its depositor. A score off less than 1 means the institution does not have enough assets on the books to theoretically pay back all its depositors

The Institutional Diversity of Equity Score gives a score of how much of an institution's assets are not customer deposits. A score of 0.05 or less indicates that less than 5% of the institution's assets are not deposits, which suggests they are not engaging in many banking activities or ventures outside of just taking deposits. A score of 0.1 or more indicates that at least 10% of an institution's deposits are not assets, which suggests they are engaging in banking activities or ventures outside off taking deposits.

Both of these measures help the AMB determine an Institution's health, and more importantly determine their deposit premium. The lower their BSI and IDE scores, the riskier the AMB views the institutions as they are either not holding enough assets to cover deposits and they are not diversifying their portfolios outside of taking deposits. The higher their BSI and IDE scores, the less risky the AMB views the institutions because they have enough assets to cover deposits and they are diversifying their portfolios outside of deposits.

Based on the BSI and IDE scores, a Depository Institution can use the following tables to determine their premium by adding the two premium percentages as based on their balance sheets data:

RDIC Premium Tables:
Note: In cases where a score could be in more than one score bracket, the Institution shall pay the bracket with lower premium.

Bank Solvency Index (BSI) Score:	Premium on Deposits:
< 0.75	4%
0.75 - 1.00	1%
1.00 - 1.25	0.5%
1.25 - 1.50	0.25%
> 1.50	0.125%

Institutional Diversity of Equity (IDE) Score:	Premium on Deposits:
< 0.04	3%
0.04 - 0.09	1%
0.09 - 0.14	0.3%
0.14 - 0.19	0.15%
> 0.19	0.05%

Here is an example to illustrate the RDIC Premium Tables being used in an applicable way:

Dodd-Frankles Bank Inc. has the following balance sheet this month:

Assets: £17,900	Liabilities: £15,925	Equity: £1975
Free Cash: £1900	Customer Deposits: £15,000
Customer Deposits: £15,000	Loan: £1925
Land: £1,000

BSI = Total Assets / Total Outstanding Deposits = £17,900 / £15,000 = 1.19

IDE = Total Equity / Total Outstanding Deposits = £1975 / £15,000 = 0.132

Dodd Frankles Bank Inc. based on the RDIC Premium Tables above, the BSI portion of the premium is 0.5% and the IDE portion of the premium is 0.3%.

0.5% + 0.3% = 0.8% or 0.008

Customer Deposits x RDIC Premium = Total Premium

£15,000 * 0.008 = £120

Dodd Frankles Bank Inc. therefore owes £120 in RDIC premiums to the AMB this month.


4. What if a Bank makes a mistake or lies on their sheets?

Another good question. The AMB is not here to witch hunt Banks and Depository Institutions. What we are here to do is two fold: encourage banking activity and to ensure the safety of depositors.

If a Depository Institution makes an honest mistake or has questions, the AMB will give leniency either in forgiving the mistake or just asking for corrected premium payments, or alternatively if a bank pays too much in premiums the AMB will refund the institution.

Fraud and intentional manipulation of the system, however, will not be met with any leniency. Administrative actions can be fines, deregistration of the offending institution, or criminal legal action.

So be good, don’t do crime or else the AMB will call SoggehToast the Prolitigation Prosecutor on you. You’ve been warned. Do not be fickle with us.