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Transparency on deposit insurance policy
Certificates of deposit insurance participation is a document certifying that a credit institution has been insured. Depositors at insured institutions will be protected by the DIV not only through its reimbursement when those that credit institutions becomes insolvency insolvent or bankruptcygo bankrupt, but also through the its on-site examination, supervision, participation in special control and financial support activitiesassistance, etc. According to regulations, the Certificates of deposit insurance participation and a copycopies of the Certificates must be publicly displayed for depositors to be able to observe and monitor.
The Law on Deposit Insurance (2012) stipulates that, no later than 15 working days before the date of their opening operations, credit institutions shall submit application dossiers for Certificates of deposit insurance participation to the deposit insurance organization. Within 05 working days of from the date of receiving application dossiers for Certificates of deposit insurance participation from credit institutions, the deposit insurance organization shall grant certificates of deposit insurance participation. In case of re-granting, the DIV shall re-grant certificates of deposit insurance participation within 05 working days of from the date of receiving proposals for replacement of certificates of deposit insurance participation from the insured institutions. The law also stipulates that the insured institutions shall publicly display copies of certificate of deposit insurance participation at all business transaction offices accepting deposits.
Certificates of deposit insurance participation and their copies of Certificates of deposit insurance participation indicates the time when the credit institutions started to be insured and also the current deposit insurance coverage limit. Mr. Vu Van Long - Deputy General Director of the DIV stated that the deposit insurance coverage limit is was an important tool of the deposit insurance policy, directly protecting the rights and interests of depositors. A reasonable high deposit insurance coverage limit will contribute to maintaining depositors' confidence in the banking system, thereby encouraging people to deposit money in credit institutions, promoting the growth of capital mobilization of the whole system. However, according to international practices, deposit insurance coverage should be appropriately limited to promote market discipline and avoid moral hazard. Therefore, the DIV stated that this limit should be transparently announced so that depositors can clearly understand their rights and interests.
After the adjustment of the insurance payment coverage limit by the Prime Minister, the DIV will review and compare the number of Certificates of deposit insurance participation and copies of the Certificates to re-grant correctly, adequately and timely to credit institutions in accordance with the provisions of the lawlegal regulations.
Ensuring correct, adequate and timely re-grant of the Certificates of deposit insurance participation and copies of the Certificates
This is not the first time that the DIV re-grants the Certificates of deposit Insurance insurance participation and copies of the Certificates on a large scale. In 2017, when the Prime Minister increased the deposit insurance coverage limit from 50 million VND to 75 million VND for anper individual at anper insured institution, the DIV changed the design of the Certificate of deposit insurance participation and its copies of the Certificate according to the institution's unified uniform brand identity to increase awareness among depositors. In addition, the new design added a security element to avoid counterfeiting. Mr. Vu Van Long shared that, the security element creates created favorable conditions for the DIV in the management, monitoring and examination of insured institutions. At the same time, it is a solution to prevent the risk of individuals counterfeiting the Certificate of deposit insurance participation or impersonate impersonating a legitimate credit institution allowed which is authorized to receive deposits from depositors which happened in some countries recently.
In 2017, the re-grant of more than 12,000 Certificates of deposit insurance participation and their copies of the Certificate according to the deadlines specified in the Law on Deposit Insurance was not a small huge challenge. At that time, the DIV developed a specific, scientificclear and detailed process with, three- steps implementation process. Step one is that before the new deposit insurance coverage limit is promulgatedAt the first step, the DIV conducts an overall review of the credit institutions, develops a valid database of the need for re-granting Certificates of deposit insurance participation and copies of the Certificates before the new deposit insurance coverage limit is promulgated. Step twoNext, after the Prime Minister promulgates the limit, the DIV will notify each insured institution about of the re-grant of the Certificate and copies of the Certificate and request these institutions to complete their applications. Step threeLastly, for the re-granting process, the DIV classifies the insured institutions according to the systemtheir size and number of business transaction offices to develop an appropriate implementation schedule and in accordance with regulations. As a result, more than 12,000 Certificates of deposit insurance participation were quickly printed and issued in a very short time.
According to the DIV, by the end of September 2021, there were 1,283 insured institutions, including 97 banks and branches of foreign banks, 1,181 people's credit funds, 01 cooperative bank and 04 microfinance institutions were re-granted.
The management of the DIV’s top executives confirmed affirmed that the process of re-granting Certificates of deposit insurance participation and copies of the Certificates was of deposit insurance participation is truly a race against time. However, with the existing experience and capacity, the DIV will ensure to grant the Certificates and copies of the Certificates to the correct recipients subjects with the sufficient amount and within the time frame prescribed by law. Timely changing and updating the Certificates of deposit insurance participation for public displaying is a solution to enhance the confidence in the deposit insurance policy, and at the same time the depositors' confidence in each insured institution.
