Deposit insurance: Need for transparent mechanism when paying over limit

Continuing the 49th session, on the afternoon of September 22, the National Assembly Standing Committee gave opinions on the draft Law on Deposit Insurance (amended).

Politburo member and National Assembly Chairman attended the meeting. Vice Chairman of the National Assembly Vu Hong Thanh chaired the meeting.

Vice Chairman of the National Assembly Vu Hong Thanh chaired the meeting. Photo: mediaquochoi

Regarding the basic content of the draft Law on Deposit Insurance (amended), Governor of the State Bank of Vietnam Nguyen Thi Hong said that the draft Law consists of 8 chapters and 44 articles, of which 28 articles are amended and supplemented; 7 new articles are added; 2 articles are abolished; and 9 articles are kept unchanged.

Some basic contents mentioned in the draft Law are: Regarding deposit insurance fees, the draft Law assigns the Governor of the State Bank to prescribe deposit insurance fees, the application of a uniform or differentiated deposit insurance fee mechanism suitable to the characteristics of the Vietnamese credit institution system in each period.

Delegates attending the meeting. Photo: mediaquochoi

The Draft Law supplements the provision on the temporary suspension of payment of deposit insurance premiums arising before the time of being placed under special control for credit institutions under special control, thereby creating a basis for these credit institutions not to immediately pay the underpaid or late deposit insurance premiums and fines (if any). However, the credit institution is responsible for developing a plan to repay the amount of money temporarily suspended in the restructuring plan.

According to the Governor of the State Bank, the draft Law also supplements the direction of expanding the investment forms of deposit insurance organizations and adding regulations to limit risks in the investment activities of deposit insurance organizations, such as: Deposit insurance organizations must control and manage risks; assign the State Bank to regulate the investment methods of deposit insurance organizations and the process of controlling and managing risks in the investment activities of deposit insurance organizations.

Chairman of the National Assembly's Finance and Economic Committee Phan Van Mai presents the inspection report at the meeting. Photo: mediaquochoi

Reviewing the Draft Law, Chairman of the National Assembly's Economic and Financial Committee Phan Van Mai proposed to clearly define the role of deposit insurance organizations and deposit insurance participants in calculating deposit insurance premiums, clarify the subject of fee determination as the basis for deposit insurance participants to pay fees; clarify the scope, subjects, and content of inspection by deposit insurance organizations of deposit insurance participants...

The draft Law needs to specify the cases and conditions for deposit insurance organizations to receive support from the state budget; borrow from credit institutions, other organizations with government guarantees or special loans from the State Bank of Vietnam...

Regarding deposit insurance fees, the Standing Committee of the Economic and Financial Committee basically agreed with the provisions of the draft Law, and at the same time suggested that the regulation of fee levels must be carefully studied, both to ensure stable revenue sources and to be consistent with the financial capacity of organizations participating in deposit insurance...

Regarding the insurance payment limit, the Standing Committee of the Economic and Financial Committee believes that it is appropriate to assign the Governor of the State Bank to regulate the insurance payment limit in each period, and at the same time, there should be specific guidelines on the principles for adjusting the insurance payment limit. Regarding payment exceeding the limit, it is necessary to clearly stipulate the basis for determining "special cases" requiring payment exceeding the limit, and to study a transparent approval process with the participation of relevant agencies, such as the State Bank, the Ministry of Finance, etc.

Discussing at the meeting, delegates focused on 8 groups of issues: Insurance payment limit; regulations allowing early payment; risk assessment, control mechanism, organizational model of deposit institutions; special lending cases...

Concluding this content, Vice Chairman of the National Assembly Vu Hong Thanh suggested that the drafting agency continue to perfect the draft Law, focusing on 9 groups of issues such as: Reviewing and institutionalizing the Politburo's resolutions to create a complete, non-overlapping legal system; clearly defining the role of deposit institutions and organizations participating in deposit insurance; carefully studying deposit insurance premiums...

The drafting agency and relevant agencies fully absorb the opinions of the National Assembly Standing Committee and the examining agency to promptly complete the dossier and ensure the quality of the draft Law on Deposit Insurance (amended) when promulgated.

Source: https://hanoimoi.vn/bao-hiem-tien-gui-can-co-che-minh-bach-khi-chi-tra-vuot-han-muc-716914.html