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10 years of implementation of the Law on deposit insurance - problems and inadequacies
Firstly, about insured deposits: Currently, according to the Law on deposit insurance and the guiding documents on the implementation of the Law on deposit insurance, it is not clear about “other forms of deposit”. Therefore, there are different opinions in determining insured deposits. In fact, there are still difficulties in determining whether certain types of deposits are insured deposits or not, such as margin deposits, prepaid cards, etc.
Secondly, about the certificate of deposit insurance: The regulation requires insured institutions to display copies of the certificate of deposit insurance participation at all transaction points with unreasonable deposits, causing waste in the case of credit institutions. In some cases, there is only one transaction point that is also the head office.
The Law on deposit insurance has no provisions on amendments and supplementation of the certificate of deposit insurance participation, the procedures for re-issuance of the certificate of deposit insurance participation when the insured institution changes information or when deposit insurance corporation change the certificate of deposit insurance participation form.
Thirdly, about the time when the obligation to reimburse arises: The Law on deposit insurance stipulates that the reimbursement obligation arises from the time the State Bank of Vietnam (SBV) issues a document to terminate special control or a document to terminate the application or a document not to apply the solvency recovery measures that the credit institution has not applied and the insured institution still falls into bankruptcy.
Currently, the Law amending and supplementing several articles of the Law on credit institutions in 2017 has been changed, regarding the time of termination of special control, the time when the SBV has regulated not to apply measures to recover the solvency but the credit institution being a insured institutions is still in fall into bankruptcy… This requires examining the time when the insurance payment obligation arises in the Law on deposit insurance to ensure timeliness and avoid putting pressure on the credit institution system.
Fourthly, about deposit insurance profiteering: In fact, there is a phenomenon of dividing, splitting, transferring ownership of a saving book to convert a deposit above the coverage limit into deposits of a lot of people to receive more deposit insurance reimbursement. The regulations on the rights and obligations of the deposit insurer have not yet provided for the deposit insurer's refusal to pay insurance premiums in case of detecting acts of taking advantage of the deposit insurance. In this case, in order to limit the exploitation of deposit insurance and protect the legitimate rights and interests of depositors, it is necessary to have specific regulations on the concept of deposit insurance profiteering, the rights and obligations of deposit insurance organizations.
Fifthly, regarding investment activities of DIV: The Law on deposit insurance stipulates that deposit insurer can use temporarily idle capital to buy government bonds, bills and deposit at the SBV. The law does not regulate that the deposit insurer can sell government bonds and bills when necessary. When an obligation to pay deposit insurance arises, the deposit insurer needs to be allowed to sell government bonds and treasury bills held by the SBV in order to actively perform its obligations.
Sixthly, the participation of deposit insurance in the process of restructuring credit institutions and dealing with weak credit institutions: According to the Law on credit institutions (amended), deposit insurer can participate in the process of developing plans for restructuring people's credit funds (PCFs). The Law on deposit insurance stipulates that the rights and obligations of the deposit insurer are not guaranteed so that the deposit insurer can participate more deeply in the restructuring process of the credit institutions.
Special loans to specially controlled credit institutions: The Law amending and supplementing a number of articles of the Law on credit institutions stipulates that DIV makes special loans to financial companies, PCFs and microfinance institutions. However, the Law on deposit insurance has no provisions on this content.
Buying long-term bonds from supporting credit institutions: The Law amending and supplementing a number of articles of the Law on credit institutions stipulates that DIV buys long-term bonds of supporting credit institutions according to the decision of SBV. The Law on deposit insurance does not regulate this content.
Amendment of the Law on deposit insurance, enhancing the role of deposit insurance
Firstly, on insured and uninsured deposits: It is necessary to study additional specific regulations or assign the SBV to specify insured and uninsured deposits insurance.
Secondly, about certificate of deposit insurance participation: Amending and supplementing the regulations on displaying certificate of deposit insurance participation in the direction that insured institution, which has only one transaction point and head office, can display the certificate of deposit insurance participation instead of a copy, and at the same time adding regulations on the concept of transaction points to ensure clarity. Supplementing regulations on amending, supplementing and re-granting the certificate of deposit insurance participation when the insured institution changes information about the certificate of deposit insurance participation or when the deposit insurer changes the form of the certificate of deposit insurance participation. Amending regulations on the time limit for granting and re-granting the certificate of deposit insurance participation to ensure the time limit for deposit insurance to process dossiers according to regulations. Supplementing regulations on procedures for issuing a copy of the certificate of deposit insurance participation form of DIV.
Thirdly, on the time when the insurance payment obligation arises: Amend and supplement the regulations so that the time when insurance payment obligation arises is earlier. Regarding the time for reimbursement: in case the deposit insurance payment dossier is complete and to stabilize depositors' psychology, it is necessary to amend and supplement the regulations on the time for reimbursement in the direction of shortening the payment term valid and eligible for payment.
Fourthly, on deposit insurance profiteering: Supplementing regulations on prohibiting deposit insurance profiteering such as intentionally dividing, splitting, transferring ownership of savings books to receive more insurance...
Fifthly, about the investment activities of the deposit insurer: Amending and supplementing regulations on the investment activities of the deposit insurer in the direction of diversifying investment forms in order to improve the efficiency of using the idle capital of the deposit insurer and to consistent with the provisions of the Law amending and supplementing a number of articles of the Law on credit institutions.
Sixthly, on the participation of the deposit insurer in the process of restructuring credit institutions, dealing with weak credit institutions: Supplementing regulations that DIV makes special loans to credit institutions that are specially controlled to be consistent with the provisions of the law amending and supplementing a number of articles of the Law on credit Institutions and in particular some contents to ensure the legal basis for the DIV during the special lending process.
Supplementing the provisions that the DIV can buy long-term bonds from supporting credit institutions to be consistent with the provisions of the Law amending and supplementing a number of articles of the Law on credit institutions and specifically a number of contents to ensure the legal basis for the DIV in the process of buying long-term bonds of supporting credit institutions.
Do research so that the DIV can participate more deeply in the process of restructuring credit institutions, handling weak credit institutions as early intervention, especially for PCFs that are specially controlled through forms such as direct takeover, participation in the management or capital contribution to direct the activities of the PCFs.
