Laying foundation for and developing deposit insurance system
In the beginning of 1988-1990, it has seen series of urban credit institution failures across the country, seriously affecting public confidence on the banking system. Eventually, the model of people's credit fund (PCF) was piloted under Decision No. 390/QD-TTg dated July 27th, 1993 by the Prime Minister. The Ministry of Finance issued the Rules of insurance on PCF responsibility for term deposits in accordance with Decision No. 101-TCQD/ BH dated 02/01/1994. Accordingly, the then-Vietnam Insurance Corporation Vietnam (Bao Viet) launched operations of deposit insurance as an introduction of deposit insurance policy in the nation. Subsequently, although the financial crisis in Asia in 1997 did not touch Vietnam, it was a warning bell for the banking system in Vietnam, determining the necessity to attach better importance to the deposit insurance matter. Establishment of the deposit insurer is inevitable in line with the growing trend of deposit insurance models occurring around the world and Vietnam’s strong integration in the global economy in that period.
In this context, the Deposit Insurance of Vietnam (DIV) was established by Decision 218/1999/QD-TTg dated November 9th, 1999 by the Prime Minister, and officially put into operation on July 7th, 2000 under legal framework such as Decree 89/1999/ND-CP and Decree 109/2005/ND-CP amending and supplementing some articles of Decree 89), Decision 75/2000/QD-TTg. The DIV is the only organization that implements policies on protecting the legitimate rights and interests of depositors; supporting credit institutions in trouble; controlling and preventing from exposure to risks in banking activities.
Changing organizational model, consolidating research, making recommendations and building legal basis
In the early stage of the introduction of deposit insurance, the DIV had faced quite few challenges. Many local PCFs in different geographical areas had been under waek performance, with some funds confronting with the risk of failure. The organizational structure of the DIV had been unstable while there were no technically specific mechanisms of operation. Thanks to the close direction of the State Bank of Vietnam (SBV), the effective support of the relevant agencies, ministries, departments of the Government and the competent units under the SBV, the DIV has step-by-step come into stability. In addition, the leaders, officers and employees of the DIV as a whole have been always united, striving for the common goals. During this period of time, the DIV has had a network that includes a headquarters and six regional branches. The apparatus in the headquarters has the Board of Directors, the Board of Management, associated with departments, divisions; while the regional branches establish their units.
In 2006, the Deposit Insurance of Vietnam had been restructuring its organizational strructure, separating the Department of Supervision into the Department of Banking Supervision (Supervision I ) and the Department of Other Credit Institutions Supervision (Supervision II); separating the Department of Examination into the Department of Banking Examination (Examination I ) and the Department of Other Credit Institutions Examination (Examination II); newly establishing the Department of Research and International Cooperation. Furthermore, the Deposit Insurance of Vietnam has carried out the restructuring process of the regional branched. In this period of time, the Deposit Insurance of Vietnam has made a remarkable turning point, with the proposal of consolidating the legal basis for deposit insurance operation.
In 2007, the Government of Vietnam assigned the SBV to play as a key role of building up the draft law on deposit insurance in cooperation with competent ministries, departments and agencies. On that basis, the Deposit Insurance of Vietnam has pro-actively made research, proposal of the content of the draft law in consultation with the SBV. In the course of the building up of the draft law, the Deposit Insurance of Vietnam has received positive supports of international partners such as the World Bank, Asia Development Bank. Earlier, the Deposit Insurance of Vietnam became the International Association of Deposit Insurance of Vietnam in 2006. The Deposit Insurance of Vietnam has signed memorandum of understanding with international deposit insurance partners, including Deposit Insurance Corporation of Japan (DICJ), Korea Deposit Insurance Corporation (KDIC), Central Deposit Insurance Corporation (CDIC), Depositor Protection Agency (DPF) of Laos, creating chances for the Deposit Insurance of Vietnam to learn lessons of success from each of nations in order for practical applications in Vietnam. Especially, the Deposit Insurance of Vietnam successfully hosted the Annual Conference V of Asia Regional Committee (ARC5), IADI in 2007, helping enhancing the position of Vietnam.
Organizational restructuring, strengthening capacities
The Law on Deposit Insurance has officially taken into effect on January 1st, 2013, from which the operation of deposit insurance has been adjusted by the highest legal basis. In this stage, the Deposit Insurance of Vietnam has continued making research, consultation with the SBV and completing the legal documents guiding the law; at the same time, proactively bringing the law on deposit insurance into reality. So far, the Deposit Insurance of Vietnam has finished the restructuring process of the headquarters and six regional branches in parallel with Decision 3090/QD-NHNN dated December 31st, 2013, .
The year 2014 remarks a 15 year history of building and developing deposit insurance system, and is a pivotal step in completing the legal basis and organizational model. Thanks to close direction of the SBV, so far this time, the legal documents guiding the law on deposit insurance have been issued; while the group of senior leaders of the Deposit Insurance of Vietnam has been gradually consolidated, creating a firm foundation for the stable development.
Looking at the whole process from the early milestone of November 9th, 1999 to present, the Deposit Insurance of Vietnam, after 15 year history of building and development, has experienced a long journey of success. All the above factors are the on-going efforts of leaders, officials and staff of the whole system of deposit insurance in different stages. We all look forward to achieving the common goal of building public confidence on the banking system through effective deposit insurance policy, from governance, organizational structure to operations.