Perfecting the Law on Deposit Insurance: Protecting depositors, keeping the system safe

Protecting depositors' rights and enhancing the safety of the credit system

Within the framework of the plenary session of the Economic and Financial Committee, delegates focused on discussing many important contents in the draft Law on Deposit Insurance (amended).

Overview of the discussion session on the contents of the Draft Law on Deposit Insurance (amended).

Previously, at the 49th Session, the National Assembly Standing Committee highly appreciated the preparation of the dossier and affirmed that the project was qualified to be submitted to the National Assembly for consideration at the 10th Session, and at the same time proposed to continue perfecting and fully institutionalizing the Party's policies on innovation and digital transformation.

Reporting at the meeting, the representative of the State Bank said that the draft Law was revised to supplement regulations on deposit insurance activities, rights and obligations of depositors, participating credit institutions, deposit insurance organizations and state management. In particular, the authority of the Deposit Insurance Organization was expanded, including: inspecting credit institutions participating in deposit insurance, providing special loans from the State Bank, participating in restructuring, and flexibly adjusting fee mechanisms and payment limits.

Deputy Chairwoman of the Economic and Financial Committee Nguyen Thi Phu Ha moderated the discussion.

Regarding the fee mechanism, the draft Law empowers the State Bank to decide on the fee level according to the same level or differentiate between credit institutions in accordance with practice. Credit institutions under special control may have a part of the fee suspended, with a request for repayment in the restructuring plan.

The obligation to pay insurance premiums arises at three points in time: when the bankruptcy plan is approved; when the State Bank suspends deposit-taking activities due to accumulated losses greater than 100% of charter capital; or when the credit institution stops paying in special cases. In an emergency, the Governor of the State Bank may decide to pay the entire amount of insured deposits.

Deputy Governor of the State Bank of Vietnam Dao Thai Son speaks

In addition, the draft Law adds the role of the Deposit Insurance Organization in handling weak credit institutions, special lending when subject to early intervention, special control or mass withdrawals.

In case the reserve fund is not enough to cover the payment, the State Bank can provide special loans without collateral. The investment form of the Deposit Insurance Organization is also expanded, including buying and selling Government bonds, State Bank bills and bonds of credit institutions with over 50% state capital.

The draft also promotes decentralization from the Government to the Governor of the State Bank, assigning the authority to decide on important issues such as fee levels, payment limits and special payment mechanisms.

Clarifying special loan mechanisms, investment management and development orientation

Many delegates acknowledged the State Bank's receptive spirit and serious acceptance of the opinions of the National Assembly Standing Committee and the verification report.

The draft Law on Deposit Insurance (amended) will ensure both the protection of the legitimate rights of depositors and the strengthening of the safety of the credit institution system.

Delegates agreed with the need to amend the law, especially decentralization from the Government to the Governor of the State Bank and increasing the initiative of the Deposit Insurance Organization.

National Assembly member working full-time at the Economic and Financial Committee Nguyen Thanh Nam requested clarification of the capital support mechanism in Clause 13, Article 14, especially the special loan mechanism from the State Bank or receiving support with repayment from the budget.

According to him, it is necessary to specify detailed conditions, procedures and processes to ensure transparency and timeliness. Regarding investment activities, delegates agreed with the expansion to increase financial resources, but requested the State Bank to issue specific conditions and indicators to ensure capital safety and limit risks.

Phan Duc Hieu, a full-time member of the Economic and Financial Committee, raised concerns about the regulation that the Deposit Insurance Organization is only allowed to deposit money or buy bonds at certain credit institutions, which could create preferential treatment that is not in line with the principles of competition and goes against the spirit of Resolution 68 on eliminating prejudice against the private economy.

He also said that the concept of “capital preservation” needs to be expressed more clearly, focusing on safety and risk reduction.

Some other opinions emphasized that the regulation of "non-profit activities" of the Deposit Insurance Organization could limit the ability to mobilize and develop resources in the context of an increasingly expanding financial market.

National Assembly member working full-time at the Economic and Financial Committee Pham Thi Hong Yen said that with a large fund size, deposit insurance not only ensures safety for depositors but is also an important resource for the economy.

Therefore, there needs to be a clear distinction between ensuring minimum safety and exploiting resources to participate in the financial market, both playing a role in stabilizing the system and supporting socio-economic development.

With the spirit of innovation, the draft Law on Deposit Insurance (amended) is continuing to be completed, ensuring the protection of the legitimate rights of depositors, strengthening the safety of the credit institution system, and expanding the role and resources of the Deposit Insurance Organization in the economy.

Source: https://daibieunhandan.vn/hoan-thien-luat-bao-hiem-tien-gui-bao-ve-nguoi-gui-tien-giu-an-toan-he-thong-10389028.html