Trang Chủ
The Law on Deposit Insurance has altered some of the DIV’s mandates and responsibilities. Restructuring regional branches has been simultaneously carried out by the DIV in the whole deposit insurance system in order to meet new requirements and comply with the Law on Deposit Insurance (DI). Concretely, the establishment of off-site supervision divisions has been made to specialize in off-site supervision activities, ensuring the high specialization.
The DIV's Mekong River Delta (MRD) Regional Branch has pro-actively made a review on and contributed comments to draft documents amending and supplementing the instructions on supervision in order to closely monitor and supervising activities of credit institutions, catching up with the state management requirements on monetary policies. These MRD Regional Branch’s activities have been implemented in parallel with their working on the draft documents on governance, direction, guiding documents under the law.
In addition, the MRD Regional Branch has pro-actively promoted improvement of the applied software of off-site supervision in line with adjustments of mechanisms and policies on activities of credit institutions. The MRD Regional Branch has so far taken methodologies in terms of statistics, collation, comparison and evaluation of indicators, movement of capitals and volatility of investments in credit institutions.
The Branch masters and closely monitors the operations of local credit institutions, especially those of weak performance. As of December 31st, 2014, total institutions under management of the Branch reached 160, including 5 joint stock commercial banks and 155 people's credit funds. These credit institutions have remained stable, had better growth rates in all the basic criteria compared to the same period of 2013, of which total capital increased on average by about 13-14%. People’s credit funds have loan balance increased by 10%, joint stock commercial banks have achieved a relatively high growth in debt balances by 25.8%. Most credit institutions have abided by the Law on Deposit Insurance and ensure criteria of banking activity safety and liquidity stability at the end of 2014 and in Lunar New Year of 2015; bad debt ratio has decreased significantly compared to the same period of 2013. In particular, joint stock commercial banks' bad debt ratio has reduced from 2.35% to 1.41% while PCF's rate has remained at 1.6%. The 2014 business report shows that more than 90% of credit institutions have made profits.
Even though. Operations of local credit institutions have shown signs of many risks. The Branch through its supervision in 2014, has detected violations of more than 400 credit institutions on the safety of banking activities. There was an increase in the number of weak and unprofitable credit institutions due to their internal potential weaknesses and negative effects by the 2008 financial crisis. This sends challenges for supervising for purposes of ensuring safe operation of credit institutions. Also, the Branch has confronted with common difficulties as follows:
- Information inputs for their reports, especially those on people credit funds are inadequate, slow and inaccurate. In order to make timely, complete, accurate and objective supervising results, it is necessary to have sufficient and timely information sources. At present, most of information to serve supervision reports of the Branch comes from financial statements and statistical reports, which have not yet fully met the above requirements.
- Information exchange and coordination mechanism between the DIV’s Regional Branches of and State Bank of Vietnam’s local branches is not specific and clear. While the DIV is now not entitled to monitor credit institutions' operation safety, on-site inspection results of the SBV is of an important role as the Branch lacks information inputs for off-site supervision. A special example in point, there is a difference in the results of indicators for supervision of adequate capital ratio, equity capital, risky assets between the DIV’s Regional branches and the SBV’s local branches, due to timely sharing in documents.
- There is no strong sanction regime for credit institutions' violations on the operation safety and regulations on deposit insurance, mitigating the effectiveness and strictness in the course of the implementation of the Law on Deposit Insurance.
- At present, there is no consistency in using the software of analyzing supervision indicators in most of the DIV’s Regional Branches, leading to certain difficulties in data collection. Monitoring results only focus on compliance with provisions of law or reflect abnormal developments of credit institutions without future risks forecast. It is credit institutions' current situation, difficulties, obstacles that have set up new requirements on improving quality and effectiveness of supervision. Accuracy and objectivity of monitoring results will be one of the criteria to be used for making rating for credit institutions – a foundation for establishing a risk-based premium system in the time to come. The DIV is now pushing up the process of building off-site supervision software that is to be set up in the whole deposit insurance system; while it is under the process of revising the draft document on the collaboration of information exchange between the DIV and the SBV’s Inspection Agencies upon the issuance of the Instruction on providing information between the two parties.
We suggest some ideas to improve the quality and effectiveness of off-site supervision as follows:
Firstly, it is necessary for the DIV to complete supervision software for the whole deposit insurance system, simultaneously to make a plan on building off-site supervision process that applies international standard BASEL and build up a time-lined schedule for application of risk-based premium system.
Secondly, the DIV recommends the SBV building a Circular on providing information between the two agencies, by which making instructions on access to, sharing database of the SBV to serve the collection of reports of all kinds necessary for prompt and accurate off-site supervision. These, eventually, help reduce time, efforts, difficulties, costs of the DIV and minimize overlapping information on public institutions.
Thirdly, it is needed to invest and upgrade the software of report collection from public institutions so that the system can connect to the SBV's reporting and information system, aiming at bilateral sharing in the time to come.
The last but not least, it is necessary to improve training and enhance qualifications of supervisors; While supervision staff of the DIV should always pro-actively and regularly study, learn to improve knowledge and professional skills, actively make their practical ideas to draft documents, especially those on the process of off-site supervision. The DIV also needs to regularly promote information exchange with public institutions, foreign bank's branches in order to advise the group of management leaders.
