Trang Chủ
On June 18, 2012, the 13th National Assembly adopted the Law on Deposit Insurance, the highest legal framework for deposit insurance activities.
The Law on Deposit Insurance has been in effect for 11 years and has proven to be a useful legal tool for the Deposit Insurance of Vietnam (DIV) to carry out its duties as a public policy organization and protect depositors' rights and interests. Despite achievements, there have emerged certain difficulties and obstacles that need to be addressed to maximize the policy's effectiveness, better protect depositors' legitimate rights and interests, and maintain the stability of the credit institution system, ensuring the safe and sound development of banking activities.
On December 30, 2022, the Prime Minister issued Decision No. 1660/QĐ-TTg, approving the Development Strategy for Deposit Insurance through 2025 with a vision toward 2030. One of the key tasks and solutions to fortify the legal framework is to amend and supplement the Law on Deposit Insurance and its guiding documents.
Additionally, the 2024 Law on Credit Institutions introduces new provisions related to deposit insurance and the role of the DIV. Specifically, the DIV is tasked with participating in early intervention in and special control of credit institutions. This task includes assessing the feasibility of plans for recovery, mergers, consolidations, or transfers of capital in people's credit funds; providing special loans to commercial banks, cooperative banks, people's credit funds, and microfinance institutions as stipulated by the Law on Deposit Insurance; purchasing long-term bonds from credit institutions mandated to take over commercial banks under the decision of the State Bank of Vietnam (SBV); and collaborating in developing bankruptcy plans for credit institutions placed under special control, making payouts to depositors in collaboration with credit institutions as per approved bankruptcy plans.
In that context, amending and supplementing the Law on Deposit Insurance is essential to further refine Vietnam's deposit insurance policy and fortify the legal framework for deposit insurance operations.
On November 14, 2024, the SBV Governor issued Decision No. 2507/QĐ-NHNN setting up an internal law drafting committee and a working group with some members from the DIV to work on the amended Law on Deposit Insurance.
The DIV has actively cooperated with SBV units to research and propose amendments and supplements to the Law on Deposit Insurance. The DIV has submitted various official documents summarizing the Law on Deposit Insurance's implementation and proposing amendments and supplements to the Law. These proposals have initially been agreed upon.
Key policy proposals for the amended Law on Deposit Insurance include:
1. Deposit insurance premium
The Law on Deposit Insurance stipulates that the deposit insurance premium is the amount of money an insured institution must pay to the deposit insurer in order to have the deposits of the insured depositors at the insured institution guaranteed.
However, the actual implementation reveals several issues, such as (i) lack of application of differential premiums based on institution classification, which is stipulated in the Law on Deposit Insurance, and (ii) financial difficulties faced by some institutions in paying premiums before being placed under special control. The 2024 Law on Credit Institutions also prescribes that the SBV shall give special loans to the DIV if its operational provision fund isn't enough to make payouts as required by the law. In this case, the DIV is required to propose higher premiums to repay the loans.
Therefore, the proposed amendments to the Law on Deposit Insurance should include (i) revising premium regulations to align with Vietnam's credit institution system, (ii) adding provisions for premium increases to repay the SBV’s special loans, and (iii) allowing temporary deferrals of premium payments for institutions placed under special control, with their repayment obligations after the control period ends.
2. DIV’s investment activities
The Law on Deposit Insurance currently limits the DIV's investment of temporary idle capital to purchasing government bonds, SBV bills, and depositing money at the SBV.
In recent years, the DIV has effectively managed its temporary idle capital in accordance with legal regulations, ensuring safety, capital growth, and self-sufficiency in covering costs, thereby contributing to the implementation of deposit insurance policy. However, the DIV's investment portfolio has significantly narrowed compared to the period before the Law on Deposit Insurance was enacted. Currently, the DIV is only permitted to use temporary idle capital to purchase government bonds, SBV bills, and place deposits at the SBV (among these, only government bonds have the potential to generate revenues).
The 2024 Law on Credit Institutions assigns additional responsibilities to the DIV, and the Development Strategy for Deposit Insurance sets goals related to capital growth, emphasizing the need to enhance the DIV's financial capacity. Therefore, the Law on Deposit Insurance should be reviewed and amended to expand investment forms (beyond the investment forms currently stipulated in the Law on Deposit Insurance) to increase the scale of the operational provision fund, including:
(i) Purchasing local government bonds; depositing funds at commercial banks; and buying or selling bonds and certificates of deposit issued by commercial banks;
(ii) Allowing the sale of government bonds, SBV bills, local government bonds, and bonds or certificates of deposit issued by commercial banks currently held by the DIV, as well as withdrawing bank deposits.
3. DIV’s rights and obligations in examining People's credit funds
According to the Law on Deposit Insurance, the DIV has the function of monitoring and examining compliance with legal regulations on deposit insurance and making recommendations to the SBV for dealing with actions violating legal regulations on deposit insurance.
On March 12, 2019, the Prime Minister issued Directive No. 06/CT-TTg on strengthening solutions to ensure the safety and stability of the people's credit funds. One of specific solutions for the SBV is to enhance the DIV’s role and assign tasks to the DIV in coordinating and supporting the SBV's examination and supervision over people's credit funds. Accordingly, since 2019, the SBV has assigned the DIV to conduct examinations of people's credit funds, with the number of examinations gradually increasing and the scope of examinations expanding over the years.
Therefore, the Law on Deposit Insurance should be amended to supplement the rights and obligations of the deposit insurer in examining people's credit funds according to plans and contents assigned by the SBV.
4. DIV’s involvement in the restructuring of troubled credit institutions in Vietnam
The 2024 Law on Credit Institutions stipulates the DIV’s participation in early intervention and special control of credit institutions, including providing special loans to support troubled credit institutions. The 2024 Law on Credit Institutions allows commercial banks, cooperative banks, people's credit funds, and microfinance institutions to borrow special loans from the deposit insurer as prescribed by the Law on Deposit Insurance. However, the 2024 Law on Credit Institutions does not specify the source of funds or the handling of risks of non-recoverable special loans.
Therefore, the Law on Deposit Insurance should be revised to supplement detailed regulations on the DIV providing special loans to credit institutions placed under special control, in accordance with the cases of special lending stipulated in the 2024 Law on Credit Institutions (e.g., special loans for recovery plans or mandatory transfer plans). It should also add mechanisms for the DIV to provide special loans to credit institutions facing bank-runs to pay depositors (similar to the SBV’s and other credit institutions’ special lending) and to write down the amount of the operational reserve fund for non-recoverable special loans.
Additionally, to further promote the role of the deposit insurer, the Law on Deposit Insurance should be amended to supplement the rights and obligations of the deposit insurer to participate further in the restructuring process of credit institutions.
5. Trigger time for insurance payment
The Law on Deposit Insurance stipulates that the insurance payment duty arises on the date when the SBV, in writing, terminates the special control status of an insured institution or terminates the application of measures to rehabilitate the solvency of the insured institution or does not apply these measures, and the insured institution is, however, still in bankruptcy; or when the SBV identifies in writing that a foreign bank’s insured branch is incapable of paying deposits to depositors (Article 22).
The 2024 Law on Credit Institutions stipulates: (i) the special control board coordinates with the credit institution placed under special control and the deposit insurer to develop a bankruptcy plan for the credit institution placed under special control, and proposes the SBV to submit it to the Government for approval, except for people's credit funds. After the bankruptcy plan is approved, the SBV submits to the Prime Minister to decide the deposit insurance coverage limit up to the deposit amount of insured individuals at the credit institution (Clause 2, Article 188); (ii) the Special control board, as the focal point, is responsible for leading and coordinating with the people's credit fund placed under special control, the deposit insurer, and the cooperative bank to develop a bankruptcy plan for the people's credit fund placed under special control, and proposes the SBV submit to the Prime Minister for approval the deposit insurance coverage limit, up to the deposit amount of insured individuals at the people's credit fund. After the Prime Minister decides the deposit insurance coverage limit, the Special control board is responsible for coordinating with the people's credit fund placed under special control, the deposit insurer, and the cooperative bank to finalize the bankruptcy plan for the people's credit fund placed under special control and submit it to the SBV for approval (Clause 3, Article 188); (iii) the deposit insurer coordinates with the credit institution to pay deposit insurance to depositors according to the approved bankruptcy plan (Clause 1, Article 190).
Therefore, to ensure consistency and uniformity in regulations, the trigger time of insurance payment obligations should be revised to align with the process of handling troubled credit institutions under the 2024 Law on Credit Institutions.
The drafting of the amended Law on Deposit Insurance is expected to be included in the National Assembly's Law and Ordinance Development Programme for 2025–2026. The timeline for drafting the law is urgent, requiring units under the SBV and DIV to promptly conduct reviews, evaluate policy impacts, and prepare proposals for the law. In the coming time, the DIV needs to proactively review contents related to deposit insurance and the deposit insurer in the 2024 Law on Credit Institutions, while continuing to identify difficulties and obstacles in implementing the Law on Deposit Insurance to provide inputs during the drafting process of the amended Law on Deposit Insurance as requested by the SBV. Units under the DIV should focus on research to propose specific amendments and supplements to the Law on Deposit Insurance, aiming to improve mechanisms to best protect the legitimate rights and interests of depositors, enhance the effectiveness of deposit insurance policies, and contribute to maintaining the stability of the credit institution system, ensuring the safe and sound development of banking activities.
Mr. Dang Duy Cuong - General Director of the DIV
Department of Research and International Cooperation (translation)
