Trang Chủ
On this occasion, Mr. Vu Hong Thanh, Chairman of the Economic Committee of the National Assembly, mentioned that there are still many issues of great concern regarding the protection of financial consumers. To safeguard financial consumers, he proposed that the Government consider the increase of deposit insurance coverage limit.
It is known that the deposit insurance coverage limit is the maximum amount that a deposit insurer pays to an individual for all insured deposits held at a insured institution when the obligation to pay deposit insurance arises.
According to the recommendations of the International Association of Deposit Insurers (IADI), the coverage should be limited, credible, cover a large majority of depositors, and consistent with the public policy objectives and related characteristics of that country.
Also, according to IADI, essential criteria of setting up the level and scope of the coverage suitable for each country includes:
Firstly, the level and scope of the coverage should be limited to minimize risks of bank run and maintain market discipline, ensuring that the large majority of depositors across banks are protected (accounting for 90-95% of depositors) while leaving a substantial proportion of the value of deposits unprotected.
Secondly, the equality for all member banks is ensured.
Thirdly, the coverage is periodically reviewed (about every 5 years) to meet public policy objectives.
Besides, the coverage should be considered based on many factors like inflation, people’s income, financial capacity of many insured institutions, the performance of finance-banking system, the effect of the supervision mechanism etc.
Now, the deposit coverage limit is 125 million dongs which has been applied since 12 December 2021 under Decision 32/2021/QD-TTg by the Prime Minister.
With this coverage limit, according to the State Bank of Vietnam, the ratio of depositors fully protected/total insured individuals in the entire system is 90.94%, in line with international standards (the recommended ratio by the International Association of Deposit Insurers is 90-95%).
