To make deposit insurance policies aligned with the development of credit institutions in the implementation of the Law on Deposit Insurance


According to Decision No.527/QDD-TTg dated 01/04/2016, the Deposit Insurance of Vietnam (DIV) is a state financial institution operating in the form of one-member limited liability company, of which whole charter capital is owned by the state. Deposit insurance (DI) policy affirms the State’s assurance to its people, therefore, exertspositive impactsonthe banking and people’s credit funds(PCFs) system, contributes to the social securityin local areas. In order to promote the effectiveness of DI policies and its reconciliation with the development of the credit institution system, the DIV has pressed ahead with strategic orientations to effectively implement the Law on Deposit Insuarance (DI Law)with respect to credit institutions and individual depositors nationwide.

Consistent and effective coordination among the DIV and the Banking Supervision Agency (BSA) of the State Bank of Vietnam (SBV), other institutions, press agencies, and prestigious individuals who have impacts on insured institution’s operation.

In fact, prior to the enforcementof the DI Law, the coordination mechanism between the DIV and the BSA (SBV) had not been concretely established which in turn resulted in operational difficulties. The DI Law and Decree No.68/2013/ND-CP dated 28/6/2013 guiding the implementation of the DI Law created the legal basis for the organization and operation of the DIV. The enforcement of Circular No.34/2016/TT-NHNN dated 28/12/2016 stipulating the information sharingbetween the SBV and the DIVinducedmore positive changes. However, the coordination and information sharing between the DIV and BSA, SBV regionalbranches still need to be enhanced. Sources of information such as the market, press, agencies and individuals which may affect insured institutions should be explicitly regulated to mitigate negative messages to the local financial system.

Supervision and examination of DI policies implementation at credit institutions, especially the PCFs

On-site examination on insured institutions in general and PCFs in particular has been so far conducted effectively by the DIV. It detected and reported actions violating legal regulations on deposit insurance to the State Bank of Vietnam in a timely manner, which in turn contributed to increasing the awareness, willingness to comply with the DI regulations and maintained the stability of the credit institutions system in general and PCFs in particular. The examination has been performed in anincreasingly consistent and logical manner at all steps. In specific context of the insured institution, the DIV drafted anexamination plan with typical association with the Examination Regulation on insured institutions.

Offsite supervision has also beenreviewed in accordance with business process guiding documents which ensure the compliance with the DI Law and adaptability to practice; additional monitoring indicators have been worked out for fair and objective assessment of the operational and financial situation. Consequently, it would facilitate the detection and warning on weaknesses and potential risks of insured institutions. However, the effectiveness of offsite supervision dependslargely on the input data which requires timely, sufficient, comprehensive and exactreporting. Meanwhile, penalty on the reporting infringementhas not been clearly regulated.

Increasing coverage limit to strengthen public confidence in the banking system

The coverage limit of 50 million dongs had been kept for 12 years when the Decision No.21/2017/QĐ-TTg dated 15/6/2017 was issued. Accordingly, the maximum insurance amount paid for all eligible deposits as stipulatedin the DI Law (including both principal and interest) owned by each individual depositor at an insured institution is 75 million dongs. Depositor reimbursement when the depository institution becomes insolvent will protect legitimate rights and interests of depositors.  The increase of DI coverage limit reflected strong commitment of the Government, the SBV and the DIV to protect legitimate rights and benefits of depositors, therefore, enhance public confidence in the banking system.

Strengthening of the policy communicationto people from all corners of life

In order to promote the effectiveness of DI policies, the DIV has tended to disseminate DI regulations to many people, especially those in rural and remote areas, by organizing workshops, seminars or cooperating with the Women’s Union, Farmer’s Union, War Veteran’s Union. Communication messages should be made popular, sufficient, timely, useful and accessible. Clear understanding of the policy would enhance the awareness, develop good habits, help depositors stay calm and handle negative information regarding banking activities in a flexible manner.

The DI policy playsan inarguably important role in maintaining the local financial stability. Itstrengthens public confidence so that people are assured to deposit their moneyatinsured institutions. The more people confidein the banking system, the more capital the bank could attract which will support the local economic development in particular and the country in general.

DIV’s Research and International Cooperation Department
Theo: "Huong Giang – Department of Administration – DIV regional branch in Mekong River Delta"