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Up to now, DIV is protecting about 8 million billion VND of depositors' deposits at 1,280 public institutions. After 24 years of operation, DIV has reimbursed 39 people's credit funds with 1,793 depositors, the total amount is nearly 27 billion VND. The timely reimbursement has demonstrated the role of DIV in protecting the legal rights of depositors, creating people's trust, and contributing to preventing the impact of chain collapse in the banking system.
Powers are expanded
The 2012 Law on deposit insurance gives DIV a number of basic powers such as granting and revoking certificates of deposit insurance participation, calculating and deposit collecting insurance premium, conducting supervision and examination of deposited deposits at public institutions, fund management and investment, reimbursement, participation in the special control process for weak credit institutions, participation in the process of debt recovery and liquidation of assets.
Recently, the authority of DIV has been increasingly expanded through deeper participation in the restructuring process of weak credit institutions to better protect the legitimate rights and interests of depositors.
Specifically, according to the provisions of the Law on credit institutions 2017 and Circular No.01/2018/TT-NHNN on special loans for specially controlled credit institutions, DIV is given a number of additional powers such as: implementing loans especially to support liquidity when credit institutions are at risk of insolvency, threatening system stability while credit institutions are under special control; special loans to credit institutions to support liquidity when that organization is at risk of insolvency, threatening system stability before the restructuring plan is approved or to support recovery according to the plan approved; DIV is allowed to purchase long-term bonds of supporting credit institutions based on the decision of the State Bank of Vietnam (SBV) to strengthen the financial capacity of healthy credit institutions to participate in governance, control, operation, financial support and operations of weak credit institution under specially controlled; Participate in coordinating with the Special Control Board and Cooperative Bank of Vietnam to evaluate the considerations of the recovery plan for the People's Credit Funds (PCFs), microfinance institutions, and financial companies; participate in developing bankruptcy plans for specially controlled credit institutions and submit them to the SBV for consideration and give out decision.
Currently, DIV is the organization that issues certificates of participation in deposit insurance and collects deposit insurance premium; supervision regularly and examination periodically 100% of PCFs. In case the have funds problems, DIV will carry out in-depth supervision to monitor developments and grasp the current status and fluctuations of deposits, especially deposits subject to insurance. Supervision and inspection of compliance with legal regulations on deposit insurance are deployed synchronously to promptly detect violations as well as prevent fraud and profiteering.
In particular, DIV also regularly rehearses and simulates reimbursement “scenarios" in case of failure to always be proactive and ready to protect the interests of depositors.
The 2017 Law on credit institutions has concretized the regulations on authority in the process of restructuring credit institutions, thereby enhancing the position of the deposit insurance organization in particular, contributing to perfecting the legal basis in general to help build a healthy credit institution system, in accordance with international practices and market mechanisms, ensuring the interests of depositors and maintaining the stability and safety of the system.
Along with that, the Project on strengthening and developing the PCFs system to 2020, with a vision to 2030 issued by the Governor of the SBV also proposes solutions to strengthen the role and coordination of the DIV in resolving and participating in supporting weak PCFs that are placed under special control. Throughout the directives of the Governor of SBV, the conclusions of the SBV's leaders at conferences on restructuring always raise the issue that DIV needs to actively participate in this process, first of all support the recovery process of small credit institutions having problems, especially PCFs.
Therefore, in 2022, the Governor of the SBV has issued a document directing DIV to be ready to coordinate with the SBV branches in provinces and cities to send personnel who meet the standards and conditions specified in Circular 21/2019/ TT-NHNN dated November 14, 2019 amended and supplemented a number of articles of circulars regulating cooperative banks, PCFS and the fund ensuring the safety of the PCFS system in order to appoint the Chairman and Director of the PCFs under special control. In addition, the Governor also requested DIV to develop internal regulations on appointing personnel to ensure standards and conditions for appointing personnel to hold key positions at the specially controlled PCFs follow the request of SBV provincial and city branches
Accordingly, in June 2023, DIV issued temporary regulations on appointing personnel to hold the positions of Chairman of the Board of directors and Director of PCFs under special control. This is the first internal document issued by the DIV to guide the implementation of appointing personnel to hold key positions at the PCFs with problems, support the recovery process, and serve as a premise for the DIV to participate more deeply, more directly in the process of restructuring credit institutions. The implementation of this temporary regulation is an opportunity for DIV staff to practice their personal qualities and abilities, and directly participate in the actual activities of the PCFs, thereby gaining knowledge and experience that are useful to the people,professional activities such as examination, supervision , participation in special control... of DIV in the future.
Enhance the role
As a State financial institution with the function of protecting the legitimate rights and interests of depositors, contributing to maintaining the stability of the system of credit institutions, ensuring the safe and healthy development of banking operations and DIV have been actively operating, promoting their roles and achieving certain achievements. restricted:
DIV helps strengthen depositors' confidence
In the context of deepening international integration, the VND is easily affected by fluctuations in strong foreign currencies. Currently, DIV is insuring deposits in VND. This is also one of the factors contributing to anti-dollarization and improving confidence in the national currency. In addition, the financial market operates at a fast pace, with large volumes, and the number of banks merging and converting may increase, causing depositors to feel worried. The fact that DIV protects individual deposits at participating institutions with a reasonable limit has created peace of mind, contributed to promoting the capital mobilization process, and preventing sudden withdrawals that threaten safety and liquidity of banks.
Contribute to maintaining system security
Accordingly, deposit insurance is an effective policy tool of the SBV and the Government. Through professional supervision and inspection of activities of public institutions, DIV can notice signs of risk and signs of weakness, violating regulations on deposit insurance and safety in banking operations, thereby commenting and recommending appropriate solutions or reporting to the SBV for remedial measures. In recent years, DIV has strengthened examination, supervision and early warning activities.
Encourage fair competition among credit institutions
In the race for customer market share, the competitive advantage usually belongs to large banks. However, with the presence of deposit insurance policy, that gap has gradually been shortened, because the role of DIV is to contribute to ensuring system safety, not just for a single credit institution. That creates equality in competition among credit institutions.
Deposit insurance policies contribute to improving the reputation of credit institutions
The presence of DIV has specifically demonstrated the Vietnamese Government's commitment to protecting depositors. Participating in deposit insurance helps the reputation of credit institutions increase, Vietnamese credit institutions become more modern and operate healthily.
Along with that, DIV has developed a deposit insurance model in accordance with international practices. Currently, there are more than 100 countries in the world that have established deposit insurance systems. In countries with strongly developed economies in general and banking systems in particular (typically the US, Japan...), deposit insurance tools are highly respected and used effectively. In Vietnam, the deposit insurance system meets international standards and is recognized by the International Association of Deposit Insurers (IADI). In recent times, DIV has actively implemented the set of basic principles for developing an effective deposit insurance system developed by the IADI, somewhat gradually meeting international standards. This has helped enhance the reputation of the Vietnamese banking system and enhance its ability to attract foreign investment.
Mr. Vu Van Long - Deputy General Director in charge of operating DIV said that after 24 years of operation, the role and authority have increasingly expanded, DIV is trying to perfect strategic goals, accompanying credit institutions aim to make good use of opportunities, overcome challenges to continue to innovate in all aspects of operations, and better protect the rights and interests of depositors.
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