Enhancing the role of deposit insurance to small and medium sized insured institutions

08:44-19/04/2018

The APRC’s 16th Annual Meeting and International Conference was a chance for participants to share information and experiences in assistance, supervision and resolution of small and medium sized insured institutions,hence appropriate policies would be proposed for improving the role of deposit insurer to these institutions.

An international conference titled “Small and medium sized insured institutions, what we can do for them” and the 16th annual meeting of the Asia Pacific Regional Committee (APRC) under the International Association of Deposit Insurers (IADI) hosted by the Deposit Insurance of Vietnam (DIV)took place on 16th and 17th April 2018 in Hanoi.

The participants included representatives from the IADI, APRC, international organizations in  Vietnam. From Vietnam side, there came Deputy Governor of the State Bank of Vietnam – Mr Dao Minh Tu.  

Speaking to open the event series, DIV’s Board of Directors Chairman and APRC’s Vice Chairman – Mr. Nguyen Quang Huy expressed a great honour that the DIV was selected again to be the host for the APRC Annual Meeting and International Conference – an important event for deposit insurers of the APRC in particular and IADI in general, 11 years since its first hosting in Hanoi in 2007.  

Looking back at the development of credit institutions system in Vietnam over recent time, Mr Nguyen Quang Huy affirmed the increasingly important role of credit institutions system as a backbone for the national economy which has made positive contribution to the socio-economic development. An indispensable component of the credit institutions system is the small and medium sized financial institutions which are typically People’s Credit Funds (PCF). After being restructured, the PCFs system in Vietnam has been playing an active role in mobilizing capital for members to develop their production and improve their living.  

There are currently 1.177 insured PCFs out of 1.275 insured institutions (more than 92 per cent). The deposit insurance has helped enhance the position of and public confidence in PCFs. The PCFs development has contributed to refining financial relations in rural areas and meeting demand for capital of members to promote their business and production contributing to hunger elimination and poverty reduction.

Like other deposit insurers in the world, DIV plays an extremely important role to PCFs, said Mr. Huy, DIV has been accompanying PCFs from inception, normal operation, to distressful time…

In the context of comprehensive restructuring of credit institutions in Vietnam, especially after the promulgation of the Law on Amendments and Supplements to a number of articles of the Law on Credit Institutions, the DIV was provided with a firm legal basis to participate more broadly and deeply in the resolution process and provide more effective assistance to PCFs, notably the financial assistance to meet their liquidity demand and to stabilize the operation of problem PCFs.

Therefore DIV’s leaders reaffirmed that the APRC’s 16th Annual Meeting and International Conference was a chance for participants to share information and experience in assistance, supervision and resolution of small and medium sized insured institutions, hence appropriate policies would be proposed for improving the role of deposit insurer to these institutions.

Speaking at the Opening Ceremony, Deputy Governor Dao Minh Tu stressed that in recent time, the DIV has taken an active part in the supervision and regulation of the credit institutions system to ensure its stability. He expressed his confidence that the conference with the theme of “Small and medium sized insured institutions, what we can do for them” together with the Annual Meeting of the APRC this time would certainly bring many benefits to the DIV. This was also a great chance for Vietnam to share information and experience drawn from practical activities with other deposit insurersin the region.  

Sharing additional information with the participants, Mr Dao Minh Tu revealed that the Government and SBV are actively implementing the Scheme on Restructuring credit institutions in association with the settlement of non-performing loans for the period 2016-2020, which defines the increasingly important role of DIV in dealing with problem small-sized credit institutions in order to protect legitimate rights and interests of depositors, contribute to maintaining the stability of credit institutions and banking safety, thus ensure social stability.

Therefore, in the upcoming time, SBV would continue to recommend the Government to issue legal documents in order to facilitate DIV to play a bigger role in the restructuring process and strengthen its prudential supervision of credit institutions, particularly small and medium-sized ones.

“Given the opportunities and challenges in implementing the newly assigned tasks, I hope that DIV will develop its internal resources, take advantage of the opportunities to enhance its role and position in ensuring the security and safety of banking industry and become a modern, effective deposit insurer in order to further integrate internationally as well as to approach international standards and practices.” Mr Dao Minh Tu said and confirmed. “The SBV as a central bank is always committed to fully support DIV’s operations in particular and IADI’s cooperation programs in general”.

The conference lasted one and a half days including 5 sessions, 3 of which focused on the operations of deposit insurers regardingsmall and medium-sized insured institutions, specifically the supervision, examination, assistance, resolution and liquidation. The 2 remaining sessions discussed the development of effective deposit insurance systems through promoting the assessment of the IADI Core Principles compliance. The enhancement of the Core Principles application is one of the leading priorities of the IADI which was listed in the IADI’s Development Strategies for the period 2016-2019. The Self-Assessment Technical Assistance Program (SATAP) is one of the initiatives to realize the above mentioned prioritized objective. 

According to the information shared at the conference, there have been some countries conducting SATAP in recent time, including Vietnam. The results of the SATAP implementation would benefit DIV in particular and the banking and financial system in general. This was a chance for DIV to self-assess the deposit insurance policy and operations based on the “Core Principles for effective deposit insurance systems” which was lately updated in November 2014. Recommendations and proposals to the State Bank of Vietnam and the Government would be thereby made in order to enhance the deposit insurance policy and operations in Vietnam. Furthermore, the assessment results and recommendations of the SATAP would help DIV accomplish its draft “Development Strategy of the Deposit Insurance of Vietnam towards 2025 and vision to 2030”. With its necessity and timeliness, SATAP was also an important part of the conference.  

T. Huyền
According "thoibaonganhang.vn"