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Deposit insurance is defined as a measure implemented in many countries in order to protect bank depositors, in full or in part, from losses caused by a bank's inability to pay its debts when due. Deposit insurance systems form one component of a financial system's safety net and promote financial stability.
"We feel that a new deposit insurance law, which could help clarify functions on the service implementation in order to protect customers while ensuring the effectiveness of the banking system, is a crucial necessity," Son said in Monday online talk on deposit insurance opened in Government web portal chinhphu.vn.
Functions governed by a proper law would lead to more efficient protection, he added.
Deputy Director of the Deposit Insurance of Viet Nam (DIV), Nguyen Manh Dung, said that deposit insurers also had to take responsibility for supervising deposit receivers.
"Supervision could help protect deposit receivers from unexpected calamities while ensuring the safety of depositors."
Son added that DIV had developed two monitoring systems whereby remote monitoring depended on data and reports from participants (banks, financial companies and credit funds) in order to make early alerts possible.
Insurers could send messages to alert organisations and other related organs, such as the State Bank, to ask for assistance, he said, while in-place control allowed deposit insurers to visit alerted organisations in order to check for risks.
"In-place controls are currently rare. The new law will have detailed regulations regarding the establishment of such controls," Dung said.
The online talks raised some suggestions on increasing the quota of insurance payments currently set at VND50 million (US$2,400). Suggestions were based on the increase in both life standards and deposits sent to commercial banks.
The quota was increased from VND30 million to VND50 million (representing five times the income per capita during the year) in August 2005. From 2005 until now, per capita income has risen to $1,100 a year; the VND50 million quota accounted for $2,400.
Son argued that the VND50 million quota should be revised and reasonably adjusted to meet reality. "Some countries around the world revised their quotas for insurance payments after the economic crisis; some even applied unlimited insurance payments."
DIV adjusted its policies when deposits at commercial banks increased. Whether these adjustments were suitable or not, however, remained open for discussion, Son concluded. — VNS
