Plain language law

New Zealand law explained for everyone

Deposit Takers Act 2023

Depositor compensation scheme - Use of fund to support resolution

233: Bank may apply fund money in manner it thinks fit

You could also call this:

"The Bank can use special fund money in any way it chooses to help people or other organisations."

Illustration for Deposit Takers Act 2023

If money is paid out of a special fund, the Bank can use that money in any way it thinks is best. The Bank has the power to pay compensation to people, even if they are not eligible depositors, under a part of the law called subpart 9 of Part 7. The Bank can also lend the money to a deposit taker that is having problems, or to another person, and decide the terms of the loan, such as how it will be repaid and if interest will be charged.

This text is automatically generated. It might be out of date or be missing some parts. Find out more about how we do this.

This page was last updated on

View the original legislation for this page at https://legislation.govt.nz/act/public/1986/0120/latest/link.aspx?id=LMS559561.

Topics:
Money and consumer rights > Banking and loansBusiness > Industry rules
Previous

232: Maximum amount based on net amount of compensation payable in hypothetical liquidation, or

"How to work out the maximum amount of money depositors can get back if a bank fails"

Next

234: Review of calculation, or

"Checking the Bank's maths is correct"

Part 6Depositor compensation scheme
Use of fund to support resolution

233Bank may apply fund money in manner it thinks fit

  1. If an amount is paid out of the fund under this subpart, the Bank may apply that amount on the terms and conditions, and otherwise in the manner, that the Bank thinks fit.

  2. The power in this section includes (without limitation) the power to do either or both of the following:

  3. to pay compensation to persons under subpart 9 of Part 7, whether or not those persons are eligible depositors:
    1. to advance the money to a licensed deposit taker in resolution (or to any other person) on the terms and conditions that the Bank determines (for example, terms about repayment, interest on the money that has been advanced, and the grant of a security interest over the property of the deposit taker or other person).