Governor of State Bank regulates deposit insurance fee level
Delegate Thai Quynh Mai Dung ( Phu Tho ) emphasized that fees are the main source of revenue to supplement the operational reserve fund to serve payment and participate in handling weak credit institutions.
Currently, Clause 1, Article 19 has assigned the Governor of the State Bank of Vietnam to regulate the deposit insurance premium level, the application of uniform or differentiated deposit insurance premiums, in accordance with the characteristics of the Vietnamese credit institution system in each period. Delegate Thai Quynh Mai Dung agreed with this decentralization and delegation of authority, but suggested a roadmap to apply differentiated deposit insurance premiums more clearly.
The State Bank is a state management agency with the function of inspecting and supervising the credit institution system. The State Bank is also a state management agency for deposit insurance activities. Therefore, it is appropriate for the Governor of the State Bank to stipulate the collection of deposit insurance fees and apply uniform or differentiated insurance fees in accordance with the practical situation.
Agreeing with the decentralization of authority to regulate deposit insurance fees to the Governor of the State Bank, delegate Thai Thi An Chung ( Nghe An ) said that the flat fee system and the differentiated fee system have their own advantages and disadvantages, no fee system has absolute advantages. While the differentiated fee system has the advantage of encouraging credit institutions to improve their management capacity, operate cautiously and safely to pay lower deposit insurance fees, this fee system has the disadvantage that credit institutions with lower ratings and more difficult financial situations have to pay more fees. Thus, this fee system can make it more difficult for low-rated credit institutions.
International practice shows that the number of countries applying flat or differential premiums is quite even. According to the 2024 annual survey of 110 deposit insurers by the International Association of Deposit Insurers, in response to the question on deposit insurance premiums, 50 deposit insurers (46%) applied flat premiums, 52 deposit insurers (47%) applied differential premiums and 8 deposit insurers (7%) applied both flat and differential premiums.
The above balance reflects the fact that countries also carefully consider the advantages and disadvantages of each fee system before deciding to apply it in their country. Therefore, delegate Thai Thi An Chung said that the flexible regulation is that the Governor of the State Bank of Vietnam regulates the application of deposit insurance fees at the same level or differentiates them in accordance with the characteristics of the credit institution system in each period.
However, in case the State Bank decides to apply differential fees according to risk levels, delegates suggested that it is necessary to add to the draft Law regulations on information security on ratings and deposit insurance fees to avoid the risk of unfair competition; creating risks of depositors withdrawing money from low-rated credit institutions to transfer to higher-rated credit institutions.
Explaining this content, Governor of the State Bank of Vietnam Nguyen Thi Hong affirmed that the draft Law on Deposit Insurance (amended) stipulates both cases of uniform fees and differentiated fees. Each type has different advantages and disadvantages and requires conditions for implementation.
Currently, Vietnam is applying a uniform fee mechanism and when necessary conditions allow, it can gradually apply differentiated deposit insurance fees to encourage credit institutions to operate well in order to reduce deposit insurance costs.
However, to be consistent with the law's orientation of only regulating general issues of principle, the specific technical contents will be assigned to the Government and ministries and branches for guidance to ensure flexibility and suitability to practice.
Increases in social insurance premiums are only made in special cases.
Another content that National Assembly delegates were interested in giving their opinions on at the meeting hall was that the draft Law added a provision that in case the Operational Reserve Fund is not enough to pay, the Deposit Insurance Organization will be given a special loan from the State Bank to pay.
Some delegates said that the addition of a special loan mechanism is a reasonable and essential financial solution, in line with international practices, ensuring consistency and consistency with the provisions of the Law on Credit Institutions; the ability to provide immediate liquidity and protect depositors' rights. This also prevents the risk of contagion and domino effects in the system.
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To ensure consistency and strictness, National Assembly delegates requested the drafting agency to review and study clear and unified regulations on cases where deposit insurance organizations are allowed to borrow specially from the State Bank.
Clause 2, Article 38 of the draft Law stipulates that the deposit insurance organization shall develop a plan to increase the deposit insurance premium to compensate for the special loan of the State Bank. Delegates agreed with the draft's provisions on applying the mechanism of increasing the deposit insurance premium to compensate for the special loan. Because when the deposit insurance is granted a special loan by the State Bank, it is necessary for the remaining healthy credit institutions to contribute additional premiums to ensure the principle of using market resources to handle market problems, avoiding the situation of mass withdrawals at healthy banks, ensuring the confidence of depositors.
However, from another perspective, delegate Nguyen Thanh Nam (Phu Tho) noted that increasing the deposit insurance premium will directly impact the operations of deposit insurance participating organizations, increase operating costs, affect the profits of deposit insurance participating organizations, and force deposit insurance participating organizations to adjust their financial and business plans. If the increase is not controlled or applied for a long time, it can negatively impact the operations of the deposit insurance participating organizations and the competitiveness of the entire system, creating financial pressure for deposit insurance participating organizations.
Therefore, to ensure that the above mechanisms are implemented effectively, transparently and with market discipline, delegate Nguyen Thanh Nam proposed to supplement and clarify a number of principles, orientations and binding provisions in the law. Accordingly, in the fee increase plan stipulated in Clause 2, Article 38, it is necessary to clearly define the criteria for the fee increase level, the application period of the fee increase, the conditions for application and public announcement to ensure transparency. At the same time, create conditions for organizations participating in the Deposit Insurance to proactively make long-term business plans.
In addition, in Clause 3, Article 38 of the draft Law, it is necessary to clearly define the responsibility of the Governor of the State Bank in guiding the deposit insurance organization to borrow special loans. The guidance must show the specific financial condition threshold, so that the deposit insurance organization is allowed to request special loans, especially only after maximizing other resources as prescribed; limit the maximum increase in deposit insurance premiums to compensate for the special loan. At the same time, it is necessary to limit the application period, the fee increase plan, the maximum repayment time frame for the special loan; affirm that the special loan must be given absolute priority to be used for the purpose of paying deposits, not applied to other market intervention goals.
“The development of laws and decentralization must go hand in hand with the establishment of a strict and effective control mechanism, by supplementing and clarifying a number of principles, orientations and binding provisions in the law. We will create a solid legal corridor to ensure that special loans are a stable, systematic and effective tool, not an easy financial exit, achieving the dual goals of protecting depositors, maintaining market discipline and safety of the entire credit system,” said delegate Nguyen Thanh Nam.
Regarding this issue, Governor Nguyen Thi Hong affirmed: The fee increase will only be implemented in special cases and when the operational reserve fund is not enough to pay the deposit insurance, and a special loan from the State Bank must be borrowed to pay the depositors. This is to prevent the risk from spreading and to best ensure the interests of depositors.
Source: https://thoibaonganhang.vn/hoan-thien-quy-dinh-ve-phi-bao-hiem-tien-gui-trong-du-thao-luat-bao-hiem-tien-gui-sua-doi-174092.html
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