Supervision, examination, and resolution of People's Credit Funds - the basis for DIV to continually participate in restructuring credit institutions

15:49-12/08/2022

The supervision, examination, and resolution of Deposit Insurance of Vietnam (DIV) of deposit insurance participating organizations, especially People's credit funds (PCFs) play an important role in detecting and promptly handling violations, give early warnings and recommend remedial measures to ensure the safe operation of the PCFs, thereby contributing to protecting the interests of depositors and preventing negative effects on the operation of other PCFs.

This is also the basis and foundation for DIV to participate more deeply and effectively in the process of restructuring credit institution system in the next phase, especially for the PCF system under the directive of the Government in Decision No. 689/QD-TTg approving the Project "Restructuring the system of credit institutions associated with non-performing loan settlement in the period of 2021 - 2025". Thereby, doing research and supplementing functions and tasks for the DIV to participate in restructuring weak credit institutions.

The project "Restructuring the system of credit institutions associated with non-performing loan settlement in the period of 2016 - 2020" has ended with a positive change of the whole system, with great strides in financial size, credit quality, non-performing loans that were controlled and handled drastically by many solutions, etc.  During that process, the DIV made positive contributions through strengthening its role in supervising, examining, and handling weak PCFs placed under special control; monitoring, analyzing, evaluating and warning the safety of the PCF system, especially the safety of deposits and loans of PCFs; supporting the examination and supervision of the SBV towards the PCFs.

Specifically, for in-depth supervision, the DIV's Steering Committee for supervision, examination, and handling of problematic PCFs, especially weak PCFs that are put under handling legal entities and commercial banks are involved in handling. In addition, newly emerging and weak PCFs are also closely monitored. Up to now, out of a total of 1181 PCFs participating in deposit insurance, the number of problematic PCFs has decreased compared to the end of 2021.

Along with that, the DIV also conducted in-depth examination on insured deposits for problematic PCFs.

The DIV appoints staff to participate in the Special Control Board at the PCFs that are put under special control. Based on the current situation of these PCFs and the orientation and direction of the SBV, as well as actual information, the operation of the PCFs, and the direction of the competent authorities, the DIV implements resolution measures that suit the actual situation, specifically:

For the PCFs which are being handled by the Special Control Board and implementing the plan of commercial banks to participate in resolution, the DIV thoroughly implements of the direction of the Governor of the SBV on contents related to the DIV. DIV focuses on the coordination in the construction and making comments on the plan of commercial banks to participate in the resolution of PCFs as well as supports the payout process for depositors at these funds.

For the PCFs under special control and the payout is being made to depositors, the DIV continues to work closely with the SBV branches, the Special Control Boards of the PCFs, local authorities and commercial banks in verifying the list of depositors; carrying out payment, as well as disseminating information to help the public understand correctly, believe in the measures taken by the Government and the SBV, preventing the risk of bank runs, maintaining security and local political situation.

With PCFs under special control and are implementing solutions to consolidate, rectify and remove difficulties, the staff of the DIV actively cooperated with the Special Control Board, provincial and city branches of SBV in updating the resolution plan of SBV, strengthening the supervision of all activities of the PCFs; supporting the Special Control Board to implement the resolution plan approved by the SBV; participating in assessing the feasibility of the recovery plan at the request of the SBV.

In the coming time, the tasks of DIV to participate in the restructuring of the PCFs will become greater and greater when it is necessary to effectively perform the tasks assigned in the Law amending and supplementing the Law on Credit Institutions 2017; Project on consolidation and development of PCFs until 2020 and orientation to 2030; Project on "Restructuring the system of credit institutions associated with non-performing loan settlement in the period of 2021 - 2025", Directive No.06/CT-TTg dated March 12, 2019 of the Prime Minister and Directive No. 06/CT- SBV of the SBV Governor of the SBV. Strengthening solutions to ensure operational safety and firmly consolidating the PCF system is considered an important task of the DIV in particular and the banking system in general. DIV said they would continue to prioritize focusing on human resources to participate in the special control of PCFs, as well as effectively coordinate and support the examination function of the SBV for PCFs in accordance with the direction of the Prime Minister at the Directive No.06.

In addition, find and propose solutions and prepare all resources for implementation when the plan to handle weak PCFs is approved by competent authorities. Take timely and full information on the operation, special control results, and the SBV's resolution plan for problematic PCFs. Effectively participate in the work at the special control board of the PCFs; study the organization and operation of the PCFs under special control to assess the plans ò recovery, special loans, payout... Actively disseminate deposit insurance policy so that people have confidence in deposit insurance policy and banking operations.

Communication Department