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The State Bank of Vietnam (SBV) is seeking comments on the draft Law on Deposit Insurance (DIV). According to the SBV's submission, after 12 years of implementing the Law on Deposit Insurance, a number of problems have arisen.
In particular, the deposit insurance fee needs to be revised and supplemented to overcome shortcomings in practical implementation. At the same time, the insurance payment limit and the time of arising of the insurance payment obligation also need to be re-regulated to be consistent and consistent with other legal documents, better protecting the legitimate rights and interests of depositors.
Currently, the deposit insurance payment limit is 125 million VND. According to the State Bank of Vietnam, with this limit, the ratio of fully insured deposit balances to total insured deposit balances in Vietnam is only 8.38%, much lower than the global average of 47%; The ratio of fully insured depositors/total insured depositors of the entire system is 92.43%. However, if excluding the number of depositors with balances from 1 - 50,000 VND, this ratio is only 87.89%, lower than the IADI recommendation of 90 - 95%.
In addition, the current regulations on the time of payment of insured deposits do not ensure timeliness, and there is no basis for the Deposit Insurance of Vietnam to make deposit payments earlier, as soon as a credit institution (CI) experiences an event that risks causing systemic insecurity. The fact that the Deposit Insurance organization can only make deposit payments after a CI has decided to go bankrupt will not ensure the role of the Deposit Insurance of Vietnam in stabilizing the psychology of depositors, preventing the risk of collapse, and best protecting the interests of depositors.
The draft Law supplements regulations on the Ministry of Finance 's responsibility for state management of deposit insurance, on management and investment of state capital in deposit insurance organizations, special loans, support for deposit payment to depositors, principles for handling special loans, participation in handling incidents and crises in the operations of credit institutions, and transitional provisions.
At the same time, abolish some regulations on administrative procedures, remove the regulation that insured deposits include promissory notes and treasury bills.
The draft also adds many regulations to strengthen decentralization and delegation of power to the Government and the Prime Minister .
In particular, the draft Law adjusts the content of decentralization to the Prime Minister to regulate the deposit insurance premium level, stipulates the application of the same deposit insurance premium or differentiated deposit insurance premium in accordance with the characteristics of the Vietnamese credit institution system based on the proposal of the State Bank; adds a provision assigning the Prime Minister to decide the payment limit for all insured deposits at organizations participating in deposit insurance at the proposal of the State Bank.
The draft Law supplements the content of decentralization to the State Bank to decide on special loans for the Vietnam Deposit Insurance; decentralization of tasks from the State Bank to the Vietnam Deposit Insurance, accordingly, the Vietnam Deposit Insurance shall inspect organizations participating in deposit insurance according to the plan and content authorized by the State Bank.
Regarding insurance payment, the draft Law stipulates that the obligation to pay insurance money arises from one of the following times: (i) The bankruptcy plan of a credit institution is approved or the State Bank of Vietnam has a document confirming that a foreign bank branch is an organization participating in the Deposit Insurance Scheme and is unable to pay deposits to depositors; (ii) The State Bank of Vietnam has a document suspending the deposit-taking activities of a credit institution under special control so that the Deposit Insurance Scheme can pay depositors when the credit institution has accumulated losses greater than 100% of the value of its charter capital and reserve funds; (iii) It is subject to payment in special cases specified in Article 40 of this Law.
In addition, the draft Law adjusts the time limit for paying insurance premiums earlier than the current Law, and adds a provision that in special cases, the Prime Minister decides to pay all insured deposits of depositors at deposit insurance participating organizations when the obligation to pay insurance premiums arises at the request of the State Bank. The above provisions aim to promote the role of deposit insurance organizations in protecting the interests of depositors and ensuring system safety.
The Deposit Insurance Organization is allowed to use its operating capital to buy and sell government bonds and SBV bills; buy and sell bonds and deposit certificates issued by state-owned commercial banks and joint-stock commercial banks with over 50% of charter capital from state-owned enterprises; deposit money at the State Bank of Vietnam, state-owned commercial banks and joint-stock commercial banks with over 50% of charter capital from state-owned enterprises; and carry out other investment activities as prescribed by the Government.
The draft Law adds a separate chapter regulating the participation of the deposit insurance organization in handling credit institutions, and in handling incidents and crises in the operations of credit institutions. Accordingly, the deposit insurance organization shall make special loans to deposit insurance participating organizations when deposit insurance participating organizations are subject to mass withdrawals, and make special loans to deposit insurance participating organizations under special control to implement recovery plans and compulsory transfer plans.
In addition, in accordance with the principles of deposit insurance operations, the deposit insurance organization is allowed to reduce the operational reserve fund for the amount of special loans that cannot be recovered.
Practice shows that when risks arise that threaten to spread and affect the safety of the system, if there are no immediate, quick measures to stabilize the psychology of depositors, it will lead to a rapid chain breakdown that is difficult to overcome.
To respond to a crisis, a comprehensive mechanism of many measures is needed, including the participation of the deposit insurance organization. Therefore, the draft Law stipulates: in case of an incident or crisis that threatens to endanger the safety of the credit institution system, the deposit insurance organization will participate in handling the incident or crisis.
The Government shall decide on the occurrence of incidents and crises and the necessary measures, including other measures other than those prescribed by law, to handle incidents and crises and report to the National Assembly at the nearest session.
Source: https://baodautu.vn/sua-luat-bao-hiem-tien-gui-thu-tuong-se-quyet-han-muc-chi-tra-bao-hiem-tien-gui-d345447.html
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