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Timely Deposit Insurance Payout – People have faith in Deposit Insurance Policy
Mr Dinh recalled he had deposited about 50 million dongs with Tru Huu PCF. After one month or two, he received the bad news that the Fund had been dissolved and the Director had run away. “I was so worried that I had some sleepless nights since all my savings could be gone. Therefore, I could not express my joy enough when DIV reimbursed all my money including interests” said Mr. Palace.
Tru Huu PCF was established in 1996 and participated in deposit insurance (DI) in 2000. At the end of 2009, the Fund showed many weaknesses and made a great asset loss due to misconduct of some officers.
On June 1, 2011, Tru Huu PCF got dissolved by the Notice of the Chairman of Bac Giang People’s Committee. At the same time, Director of State Bank – Bac Giang Branch issued a Decision on revoking the Fund's operating license. On June 7, 2011, DIV revoked the certificate of deposit insurance of Tru Huu PCF and quickly completed relevant documents for reimbursing the depositors.
Right afterwards, DIV’s Governing Board quickly approved the DI payout plan. specifically, DIV East North Branch was tasked to cooperate with the State Bank of Vietnam (SBV)-Bac Giang Branch, BIDV-Bac Giang Branch (the authorized organization for payout) and Luc Ngan District People's Committee, Tru Huu Commune People's Committee, and the Liquidation Committee of Tru Huu PCF…to make DI payment to the depositors.
The total amount of over 3 billion dongs was made to 104 depositors with 113 deposit accounts. The local authority enthusiastically facilitates the payout process by confirming personal identification, permanent address of depositors when necessary and maintaining order at the payout place. The reimbursed depositors were all happy and more confident in the depositor protection policy of the Government. Spouses, Mr. Pham Van Kim and Mrs. Le Thi Hoa in Binh Noi Hamlet, Tru Huu Commune were among more than hundred depositors sharing the “happy tears” feeling when they got back their money which “could have been lost”.
Mr. Vu Tat Son – Vice President of Tru Huu People’s Committee cum the Deputy Chairman of the Liquidation Committee of Tru Huu PCF recalled “At that time, so many people gathered outside our office requesting reimbursement. The timely made by DIV in close coordination with governmental authorities met the depositors’ payout expectation, absolute uncertainty among people, thus ensuring order and security in the area”.
Regulations need specific guidance
DIV and related agencies have responded quickly to PCF failures. This has significantly contributed to reassuring the depositors, preventing contagion effects of these failures on the whole system and maintaining order and security.
However, for timely and smooth insurance deposit payout, it is necessary to clarify some points as to the time when insurance payment duty arises in the current legal framework.
Article 22, the Law on Deposit Insurance, stipulates that Insurance payment duty arose from the date when the State Bank, in writing, terminated the special control status of an insured institution or terminated the application of measures to rehabilitate solvency of the institute, and the institute is, however, still in bankruptcy.
In this regard, the Law on DI and Law on Credit Institutions do not clearly stipulate whether the SBV or the Court has the authority to determine the bankruptcy of an institute. As stipulated in the Law on Bankruptcy and the Decree guiding the implementation of the Law on Bankruptcy, both the SBV and the Court have this power. However, in order to declare the bankruptcy of an institutional institution, the Court must still rely on the SBV’s confirmation of the insolvency of the institution.
The Decree 68 on detailing and guiding the implementation of the Deposit Insurance Law dated on June 28, 2013 also does not provide detailed guidance on this issue. Therefore, the SBV should issue the guidance soon to fully ensure the legality of payout. The Government should clarify the authority determining the bankruptcy of an institutional institution. If SBV has this right, it should be stated on the guiding documents of the SBV as stipulated in Article 22, Law on DI.
Furthermore, in order to make timely insurance payment, and protect the legitimate rights and interests of depositors, the SBV should quickly issue the document guiding SBV's branches and related agencies in dealing with bankruptcy PCFs. Meanwhile, the guidance on cooperative mechanisms among SBV’s divisions, departments, branches and DIV will also contribute to ensure the timely and smooth reimbursement of depositors’ claims.
