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When a member institution goes bankrupt or becomes insolvent, the Deposit Insurance of Vietnam (DIV) will reimburse depositors of their deposits up to the coverage limit. To complete this task, according to Article 30 of the Law on Deposit Insurance (DI) and Article 11 of Decree 68/2013/ND-CP of the Government on detailing and guiding the implementation of the Law on Deposit Insurance, the DIV uses financial resources from the following sources:
- The charter capital of the deposit insurance provided by the state budget;
- Collection of deposit insurance premium;
- Revenue from investment of the temporary idle capital;
- Other sources of revenue according to the regulations of the law.
In the situation when the DIV's capital resources are temporarily insufficient to reimburse depositors, the DIV is allowed to receive assistance on the principle of reimbursement from the State budget pending to the Prime Minister's decisions or to borrow from credit institutions, other institutions under guarantee of the Government.
With the operating objective of protecting the legitimate rights and interests of depositors, contributing to the stability of credit institutions, ensuring the safety and sound development of the banking system, the DIV plays an important role in the financial safety net. In the coming time, the DIV needs to strengthen its role in the credit institutions restructuring process, to better protect the legitimate interests of depositors.
Improving financial capacity is one of the key factors which ensures the DIV's participation effective in the process of restructuring weak credit institutions under the direction of the SBV, further promoting the role of the deposit insurance in the support and resolution of weak people's credit funds under special control.
Increasing charter capital - Ensuring financial capacity of DIV
On November 20, 2023, Deputy Prime Minister Le Minh Khai signed Decision 1434/QD-TTg amending Prime Minister’s Decision No. 1394/QD-TTg dated August 13, 2013 on the establishment of the Deposit Insurance of Vietnam and regulating the functions and tasks of the Deposit Insurance of Vietnam; amending Prime Minister's Decision No. 1395/QD-TTg dated August 13, 2013 approving the Charter on the organization and operation of the Deposit Insurance of Vietnam.
According to Decision 1434/QD-TTg, the charter capital of the Deposit Insurance of Vietnam is 5,281 billion VND, an increase compared to the 5,000 billion VND amount in Decision No. 1394/QD-TTg dated August 13, 2013.
The charter capital of DIV was increased to match the growing trend in scale of the credit institution system and the growth of insured deposits, as well as in accordance with the orientation of the banking industry which requires banks to increase their charter capital to meet capital requirements according to Basel II standards. Increasing the capital charter of DIV will ensure the financial capacity of the deposit insurance, affirm the state's commitment and enhance depositors' confidence in the deposit insurance policy.
The charter capital of DIV will be increased to 10,000 billion VND by 2025
In the Deposit Insurance Development Strategy to 2025, with orientation to 2030, DIV sets the goal to have appropriate amendments and supplements to relevant legal regulations with an aim to increase charter capital to 10,000 billion VND by 2025. specifically, the charter capital of the DIV will be increased to 10,000 billion VND by 2025 and to 15,000 billion VND by 2030 from self-accumulated sources and other legal capital sources to ensure the deposit insurer's financial capacity.
The deposit insurance development strategy also states that the strengthening of the financial capacity of the Deposit Insurance of Vietnam will be conducted through the following methods:
Allowing the DIV to diversify their investment forms and portfolio, including: Buying and selling government-guaranteed bonds; Depositing money at commercial banks with good performance; Buying and selling bonds, debentures, bills of credit, and certificates of deposit issued by commercial banks with good ratings; Buying and selling local government bonds according to the provisions of the Law on State Budget, Law on Public Debt Management, guidance documents.
In addition, loans from the State Bank of Vietnam will be added in case the capital of the DIV is insufficient to reimburse depositors; a scheme to access capital support will also be developed in case the DIV's capital is temporarily insufficient to reimburse depositors.
Department of Research and International Cooperation
