Trang Chủ
Ms. Ta Thi Yen, Deputy Chairwoman, Committee for Deputies’ Affairs of the National Assembly
Achievements and emerging issues
According to the Deposit Insurance of Vietnam (DIV), currently, 100% of insured credit institutions and foreign bank branches comply with the Law on Deposit Insurance. As of December 2024, the number of insured institutions reached 1,277, including 96 commercial banks and foreign bank branches, one cooperative bank, 1,176 people's credit funds (PCFs), and four microfinance institutions. By the end of December 2024, the number of insured accounts totaled 123 million. The deposit insurance coverage limit has been periodically reviewed and adjusted as follows: 30 million VND (1999 - August 2005), 50 million VND (September 2005 - July 2017), 75 million VND (August 5, 2017 - December 11, 2021), and currently 125 million VND (from December 12, 2021 onwards). At this coverage level, as of June 2024, 92.19% of insured depositors were fully protected in Vietnam.
The Law on Deposit Insurance stipulates that the DIV is responsible for collecting, analyzing, and processing information on insured institutions to detect and recommend that the State Bank of Vietnam (SBV) promptly address violations of banking safety regulations and risks threatening the stability of the banking system. Therefore, the DIV has developed plans and conducted on-site examinations of approximately 300 insured institutions. Besides, the DIV also cooperated with and supported the SBV in examining PCFs. These examinations uncovered violations and shortcomings in compliance with the Law on Deposit Insurance, the Law on Credit Institutions, and SBV regulations. Additionally, the DIV has managed to identify the causes of these problems and proposed suitable measures to the SBV for prompt and effective corrective actions. The DIV has also identified inconsistencies in policies and the regulatory framework and made appropriate proposals and recommendations to the competent authorities for relevant amendments, which improve the oversight over insured institutions and support their safe and sound development.
However, after more than 12 years of implementation, several provisions of the Law on Deposit Insurance and related regulations on deposit insurance and the DIV are no longer sufficient to meet the evolving requirements for improving the deposit insurance framework and policies, as well as for developing the deposit insurer suited to new conditions amid growing international integration. Hence, it is essential to continue improving the legal framework on deposit insurance to enhance its effectiveness in protecting the legitimate rights and interests of depositors, ensuring the safety of the financial system, and keeping pace with the nation's socioeconomic development.
Moreover, in 2024, the National Assembly promulgated the amended Law on Credit Institutions, which includes new provisions on the rights and responsibilities of the DIV in early intervention and special control processes. However, these provisions do not specify the details but refer to the “law(s) and regulations on deposit insurance,” thereby necessitating amendments to ensure consistency between the two laws. This will provide a clearer legal basis for the DIV to fulfill its mandates effectively and contribute to the stability of the credit institution system.
Amending the Law on Deposit Insurance also serves to implement Plan No. 81/KH-UBTVQH dated November 5, 2021, issued by the National Assembly Standing Committee to implement the Political Bureau’s Conclusion No. 19-KL/TW. This plan is part of the Orientation Program for the Legislative Agenda of the 15th National Assembly, which sets out the task of researching and reviewing the Law on Deposit Insurance. This task aligns with the overall requirements of the Resolution of the 13th National Party Congress on continuing to build and perfect consistent legal institutions for our nation's development, with top priority given to the socialist-oriented market economy. The amendment also follows Decision No. 986/QĐ-TTg, dated August 8, 2018, on the Development Strategy for Vietnam's Banking Sector to 2025, with orientation to 2030; and Decision No. 1660/QĐ-TTg dated December 30, 2022, on the Development Strategic Plan for Deposit Insurance through 2025, with a vision towards 2030.
Key issues to address during the Law amendment
Based on a review of the current Law on Deposit Insurance and reports from the DIV, several critical areas require attention during the amendment, including:
Regarding deposit insurance premiums, Vietnam currently applies an annual flat-rate premium of 0.15% of the average insured deposit balance. This mechanism remains legally sound, supports the stable growth of the DIV’s Operational Reserve Fund, contributes to the banking system restructuring and non-performing loan resolution and supports economic development. However, in accordance with international practice and guidelines from the International Association of Deposit Insurers (IADI), it may be necessary to study and develop options for a premium framework that includes categories and levels, aligning with a roadmap for implementing a differential premium mechanism. Such a mechanism should correspond with the DIV’s capabilities and authority in monitoring, assessing risks, and classifying insured institutions. Accordingly, the higher risk level of an insured institution, the more deposit insurance premium it should pay, and vice versa. At the same time, appropriate measures should be in place to allow weak institutions to exit the market.
In order to enhance the financial capacity of the DIV to perform its assigned tasks effectively, it is necessary to study and amend certain regulations related to the financial regime of the
DIV. These amendments should clarify and ensure transparency regarding the sources of operating capital, as well as the financial, accounting, and auditing regimes of the DIV. Specifically, the regulations should clearly define the DIV’s revenues and expenditures and stipulate how to handle operating surpluses or deficits. This includes adding provisions for cases where the DIV incurs a deficit due to using its operating capital to reimburse depositors in accordance with the law and regulations. The regulations should also cover the DIV’s participation in early intervention or special control measures with respect to insured institutions.
The amendments and supplements should aim to expand the forms of investment, beyond those stipulated in the Law on Deposit Insurance, in order to increase the size of the Operational Reserve Fund. At the same time, additional regulations should be introduced to limit risks in the DIV’s investment activities. These may include allowing the use of temporarily idle funds to buy and sell government bonds, local government bonds, and SBV treasury bills; to buy and sell bonds and certificates of deposit issued by state-owned commercial banks and joint-stock commercial banks with over 50% state ownership; and to make deposits at the SBV, state-owned commercial banks, and joint-stock commercial banks with more than 50% state ownership. In addition, regulations should be added to mitigate further investment risks, including allowing the DIV to purchase long-term bonds issued by assuming credit institutions in mandatory P&A transactions as decided by the SBV.
Amendments should expand the rights and obligations of the DIV, enhancing its authority and responsibilities in examining and supervising credit institutions. This includes the right to appoint qualified personnel to management and executive positions at PCFs under special control, and to participate in developing restructuring plans for such institutions in line with the tasks assigned by the SBV. Furthermore, the DIV's role in restructuring plan development should be clearly defined.
The amendments and supplements should be made to the regulations concerning the participation of the DIV in the restructuring of weak credit institutions. These changes should align with the Law on Credit Institutions and aim to enhance the role of the DIV in the restructuring process, as outlined in the Development Strategic Plan for Deposit Insurance. There should be mechanisms and measures for crisis management that mobilize the participation of the DIV, such as:
- supplementing detailed regulations on the provision of special loans by the DIV to credit institutions placed under special control to implement recovery plans or mandatory P&A plans (in synchronization with the Law on Credit Institutions);
- supplementing provisions that allow the DIV to provide special loans to commercial banks, cooperative banks, PCFs, and microfinance institutions experiencing bank runs (similar to the SBV and other credit institutions' special lending mechanisms); allowing write-downs from the DIV’s Operational Reserve Fund for unrecovered special loans;
- developing a mechanism for the DIV to provide special loans to credit institutions under special control that have lost or are at risk of losing solvency, to pay depositors as instructed by the SBV, with the right to obtain special loans from the SBV when temporarily idle funds are insufficient. The DIV should be entitled to recover special loans when the borrowing credit institution is subject to a mandatory P&A.
Regarding the improvement of regulations on deposit insurance reimbursement, it is necessary to amend and supplement provisions to clearly specify the point of time at which the obligation to pay deposit insurance arises. This should align with the process for handling weak credit institutions as stipulated in the Law on Credit Institutions. At the same time, considerations should be given to establishing a mechanism for full payout of insured deposits in special cases. This includes revising the Law on Deposit Insurance to more clearly and consistently define the timing of the insurance payment obligation in line with the process for dealing with weak credit institutions. Regulations on the timeframe for insurance payouts should be revised to shorten the period when payout documentation is complete, valid, and eligible, enabling earlier payment to depositors and maintaining depositor confidence. Furthermore, provisions should be added allowing, in special cases, the Prime Minister to decide on the payout of full insured deposits to depositors at insured institutions when the obligation to pay deposit insurance arises, based on the recommendation of the SBV.
I believe that the National Assembly’s consideration and discussion of the draft law amending and supplementing provisions of the Law on Deposit Insurance will send a positive signal to the domestic financial market, contributing to macroeconomic stability and the safety of the credit institution system. This is especially important amid the current global trade turbulence caused by the United States’ new tariff policies, which are strongly impacting the global economic growth and stability, posing significant challenges to Vietnam’s target of achieving a GDP growth rate of 8% or more in 2025. The Law revision will also help promote traditional growth drivers such as investment, consumption, and exports.
Ms. Ta Thi Yen, Deputy Chairwoman, Committee for Deputies’ Affairs of the National Assembly
Research and International Cooperation Department (translation)
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