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Seeking opinions from organizations and individuals on the draft dossier proposing the development of the Law on Deposit Insurance (amended) related to this content, explaining the policy's objectives, the State Bank of Vietnam (SBV) said that Decision No. 986/QD-TTg dated August 8, 2018, of the Prime Minister on the Development Strategy of Vietnam Banking Sector to 2025, with a vision to 2030, set the following goals for the Deposit Insurance of Vietnam (DIV): "Strengthening financial capacity, improving operational capacity, completing the organizational model, improving staff qualifications, applying modern technology to effectively perform the tasks of supervision, examination, participating in special control, detecting and early warning of potential risks for insured institutions; participating in effective restructuring of weak credit institutions (CIs)...".
In Directive No. 06/CT-TTg dated March 12, 2019, of the Prime Minister on strengthening solutions to ensure operational safety and firmly consolidate the system of people's credit funds (PCFs), the Prime Minister requested to promote the role of the Deposit Insurance of Vietnam (DIV) in providing financial support and resolving difficulties of PCFs, and to strengthen the role of participation and support of the SBV's examination and supervision functions for PCFs.
According to the SBV, implementing the Prime Minister's direction, from 2019 to the present, the SBV has assigned the DIV to examine 234 PCFs. During the examination process, some difficulties and problems have arisen, such as the rights and obligations of the DIV in examination and supervision (while the Law on Deposit Insurance has not yet recognized these rights and obligations of DIV), the basis for specific instructions on how and how to coordinate, the recording of violations during the examination and supervision process of the DIV and the resolving of recommendations and proposals of the DIV violations... because this activity has not been institutionalized in the Law on Deposit Insurance, so there is not enough basis to resolve the above-mentioned problems.
In addition, the country currently has about 1,178 PCFs, with a large number, while the quality of the funds' operations is uneven. Some PCFs have committed violations directly related to the fund's managers, controllers, and operators. In the past, the Cooperative Bank has sent personnel to participate in the management of PCFs; however, due to the large number of PCFs, the participation of DIV is needed to perform this task.
Article 13, Clause 13 of the Law on Deposit Insurance stipulates the rights and obligations of insured institutions in restructuring deposit insurers. However, there are no regulations on assigning people to participate in restructuring credit institutions at the SBV's request. Therefore, it is necessary to add this regulation to the Law to ensure the legal basis for the implementation process.
In addition, the Law on Credit Institutions 2024 stipulates that the DIV participates in the process of developing a restructuring plan for credit institutions subject to special supervision, including Assessing the feasibility of the plan to restore the PCFs (Clause 2, Article 169), Assessing the feasibility of the plan to merge, consolidate, and transfer all capital contributions of the PCFs subject to special supervision (Clause 2, Article 176); Coordinating the development of a plan to bankrupt credit institutions subject to special supervision. Accordingly, it is necessary to review and supplement the corresponding rights and obligations of the deposit insurer in the Law on Deposit Insurance to ensure consistency and unity.
The SBV indicated that from the above shortcomings, it has set a goal of developing a policy to create a legal basis for the deposit insurance to examine PCFs according to the plan and content assigned by the SBV and to assign people to participate in management and operation at the PCFs under the supervision of the SBV as designated by the SBV The content of the policy on amending and supplementing the rights and obligations of the deposit insurer is expected to include expanding the rights and obligations of the deposit insurer in supervising and examining credit institutions; assigning qualified and qualified personnel to hold management and operation positions at the PCFs under the supervision of the SBV and participating in the process of developing a restructuring plan for the credit institutions under the supervision of the SBV.
Accordingly, the policy implementation solutions proposed by the SBV include:
First, supplement the deposit insurer's rights and obligations to examine and supervise PCFs and other types of credit institutions according to the plan and content assigned by the SBV.
Second, supplement the deposit insurer's rights and obligations to appoint qualified and eligible persons to hold the positions of Chairman of the Board of Directors, Director, and other management and executive positions of the PCFs as required by the SBV.
Third, supplement DIV's rights and obligations to participate in developing a restructuring plan for credit institutions under the SBV.
Regarding the reasons for choosing the above solutions, the SBV said that the options ensure constitutionality, legality, and consistency with the legal system. In particular, it ensures consistency and conformity between legal provisions and instructions from competent authorities in enhancing the role and assigning tasks to the DIV in coordinating, participating in, and supporting the SBV's examination and supervision functions for the PCFs. Regarding compatibility with relevant international treaties to which Vietnam is a member, the policy solutions ensure that they do not violate international treaties.
Assessing the socio-economic impact of the above policy solutions, the SBV said that, in terms of positive impact, the state management agency with these proposals would have a sufficient legal basis in assigning and coordinating with the DIV to examine and supervise credit institutions, especially for the PCFs which currently have a very large number nationwide.
At the same time, the support of the deposit insurer also helps to strengthen the examination and supervision of credit institutions, thereby improving compliance with the Law in the operations of credit institutions, helping the deposit insurer better perform its role in protecting the rights of depositors at credit institutions. This policy will also ensure the legal basis for the DIV to proactively develop examination plans and annual financial plans, as well as arrange time, human resources, and other material conditions to perform assigned tasks.
Regarding negative impacts, according to the assessment of the SBV, with these solutions, the deposit insurer needs to arrange and train more human resources and invest more in information technology systems to perform assigned tasks. In the overall policies to amend and supplement the Law on Deposit Insurance, there is a combination of policies to improve the financial capacity of the deposit insurer and policies to strengthen the role of the deposit insurer in supervising, examining, and restructuring credit institutions.
"Through analysis and assessment of the policy's impacts, the positive and negative aspects of the proposed solutions, the drafting agency proposes to choose the above solution to ensure the policy development goals," - SBV added.
To thoroughly resolve the above-mentioned shortcomings, the SBV believes that it is necessary to submit to the National Assembly the Law on Deposit Insurance (amended), which includes policies on the rights and obligations of the deposit insurer. These amendments and supplements aim to improve the operational efficiency of the DIV, better protect the interests of depositors, and contribute to maintaining the stability of the credit institution system, ensuring the safe and healthy development of banking activities.
On the part of the DIV, the representative of the agency said that perfecting the policy on the rights and obligations of the deposit insurer is an objective requirement to strengthen the role of the DIV in restructuring weak credit institutions. Clear legal regulations help the deposit insurer participate more effectively in this process from the early intervention stage to the special control stage, thereby actively contributing to ensuring the stability of the banking system and protecting the rights of depositors. Amending and supplementing legal regulations related to the rights and obligations of the deposit insurer helps avoid overlaps and conflicts with current legal documents, creating favorable conditions for the deposit insurer to perform well its assigned tasks.
In general, perfecting regulations on the rights and obligations of the deposit insurer is an important factor in ensuring the stability and sustainable development of the credit institution system while helping to better protect depositors' legitimate rights.
Communication Department (Translation)
