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It can be viewed that the DIV’s role and position has been more enhanced through its further involvement in the settlement of CIs under special control in order to better protect the legitimate rights and interests of depositors, support weak CIs being restructured, contributing to ensuring the safety of the banking and financial system.
Since the 2017 Law on CIs took effect, the DIV received a number of documents requesting comments on the recovery plans for PCFs under special control by SCB. The DIV gave some comments on the following contents:
(i) Plan for raising charter capital and implementation time schedule in the following cases: the actual value of the charter capital is lower than the legal capital; capital adequacy ratio below the level prescribed by the State Bank of Vietnam (SBV); at the SBV’s request of to ensure the operational safety of CIs;
(ii) Business plan in the recovery period;
(iii) Plan on organizational structure, administration, and management;
(iv) Plan to deal with financial deficiencies, bad debts, collateral and remedies for legal violations;
(v) Payment plan scheduled for deposits of depositors as legal entities, deposits and loans of other CIs; plan for handling special loans provided, including special loans specified in Clause 3, Article 145a of this Law;
(vi) The support measures specified in Article 148b of the 2017 Law on CIs need to be applied;
(vii) Roadmap and time schedule for implementation of the recovery plan.
During the process of commenting on the feasibility assessment of the recovery plan for PCFs under special control, the DIV encountered a number of difficulties and limitations as follows:
- Regarding the legal basis, the SBV has not yet issued by-law documents to guide some contents of the 2017 Law on CIs on the DIV’s participating in evaluating feasibility of the recovery plan for PCFs, MFIs, and FCs under special control. At the same time, there have not been specific provisions on the basis, criteria and methods of evaluating feasibility of the recovery plan. Therefore, the DIV’s assessment is only based on the actual situation of the CIs under special control, without a clear legal basis. As for FCs, which is not insured by the DIV as legally stipulated, there are no available information on their organization and operations for the DIV to conduct the assessment.
- Regarding records, documents and information for assessment: In fact, the DIV is authorized to have access only to certain information about the current situation and settlement of PCFs under special control through shared documents from the SBV and SCB. In addition, the information on the assessment of the current status of PCFs under special control which is delivered and used as a basis for evaluating the feasibility of the recovery plan, is currently being carried out by the PCFs themselves. This information has not been examined or reviewed by an independent third party, so its transparency and accuracy has not been guaranteed.
In addition, the DIV cooperates with the SCB to evaluate the feasibility of recovery plan for PCFs under the special control, and the SCB will be the host coordinator. As a result of it, the DIV will act on the SCB’s request. Therefore, in some cases, the DIV staff participating in the PCF Special Control Board cannot be fully informed; cannot comment or convene meetings, so the DIV’s participation in the assessment is still limited.
- This is the DIV’s new professional operation, so there are certain difficulties and limitations in terms of human resources, experience, and professional qualifications of the DIV staff when participating in evaluating the feasibility of the recovery plan for PCFs, MFIs, and FCs under special control.
In order to participate further in the restructuring process of weak CIs under the SBV’s direction, the DIV has actively developed specific solutions to improve its participation in resolving weak CIs in general and its participation in evaluating the feasibility of the recovery plan for PCFs, MFIs, and FCs under special control in the coming time. Namely:
First, in terms of administrative and governance documents, the DIV issued a Regulation on participation in evaluating the feasibility of the recovery plan for PCFs, MFIs, and FCs under special control, authorized to the Board of Directors, stipulating the main contents on principles; the authority to decide on the results of participation in evaluating the feasibility of recovery plans; documents and materials serving as a basis for evaluating the feasibility of the recovery plan; the content and scope of evaluating the feasibility of the recovery plan; the process of evaluating the feasibility of recovery plan; responsibilities of the DIV’s units
to participate in evaluating the feasibility of the recovery plan. It also creates the basis for the DIV staff to evaluate the feasibility of the recovery plan for PCFs, MFIs, and FCs under special control, propose resolution measures at the SCB’s request, and to address some problems arising during the whole process of feasibility assessment.
Second, in terms of human resources, the DIV successfully organized the Project on professional training courses designed for the DIV staff participating in the special control of CIs in the 2019-2021 period. The first Project of the DIV includes 05 training courses (03 basic courses and 02 advanced courses), which are systematically built, with a team of recognized lecturers who are members of the DIV Board of Management, representatives of the leaders from the SBV, the DIV’s regional branch in Hanoi and other related individuals and units. The course helps to equip with more specialized knowledge and soft skills for more than 300 DIV employees who participate in the special control.
Third, in terms of the mechanism of coordination and information exchange, the DIV has actively developed and issued a Regulatory Framework on coordination and information exchange between the DIV’s regional branches and the SBV’s branches in provinces and cities, and has signed the agreements on the Regulation on coordination and information exchange with 45/57 SBV branches in provinces and cities where PCFs are located, according to the direction of the SBV Governor. Therefore, it has contributed to strengthening the DIV’s abilities in coordinating, collecting, exchanging, and sharing information with the SBV’s regional branches in provinces and cities, with SCB in dealing with CIs under special control in general, in participating in the feasibility of the recovery plan for PCFs, MFIs, and FCs under special control in particular.
Fourth, the DIV continues to study and revise the Law on DI in the 2021-2025 period under the direction of promoting the DI policy in line with international practices; supplementing the mechanism for the DIV to improve financial capacity, and participating further in the process of restructuring CIs. The DIV strives to become an extremely effective tool of the Government and the SBV in resolving weak CIs under the SBV’s direction.
With the above main solutions and under the close direction of the DIV Board of Directors, along with the determination of the whole DIV staff, the DIV continues to strive to fulfill the assigned tasks in 2022 to participate more in the process of restructuring weak CIs.
