* Deposit Insurance - “Safety Anchor of the economy”
Dr. Cao Sy Kiem – Member of The Committee of Economy of the National Assembly – former Governor of the State Bank of Vietnam (SBV) shared his opinion that “Deposit Insurance is anchor of the economy”. “Stepping in market-oriented economy, there is no risk provision without deposit insurance. In this period of time, banks stumbling in dilemma shall “suffer” themselves. Chain failures of cooperatives in the year 1990 challenged us spending a nearly 4-year time on resolution due to no regulations on keeping safety for this model. Consequently, people sent their payment claims out of banks’ capacity, resulting in critical protest. This is a lesson of bitterness when we have no DIS”, he added.
Remembering his memory before the foundation of DIV, Dr. Vo Tri Thanh - Deputy General Director of CIEM expressed: “I kept very well in my mind the incident of protest in front of Hanoi People’s Committee’s Headquarters under credit cooperatives failures. I happened to know other events in some cities and provinces or bank runs as result of groundless information about of ACB”.
Dr. Dinh Xuan Thao – national assembly member, General Director of Legislative Research Institute stressed: “It is more important to maintain banking system stability. Whatever deposits-related risk happening, provision fund shall be ensuring that no damages for people and commercial banks”. Deposit Insurance as financial institution can not lack supervision function that contributes to improving efficiency of banking operation”
* With regards of legal status of Deposit Insurance of Vietnam
“The best way is to make DI design of better access to market on basis of international practices in which we can basically deal with issues of organizational and institutional model as well as coordination among players in financial supervision system, such as State Bank, Ministry of Finance, National Financial Supervisory Commission. This helps ensure DI activities to bring into play in prompt, sufficient, right placed manner, making critical contribution to financial system in the term of confidence and safety” . Dr. Cao Sy Kiem expressed
“An independent or at least relatively independent DI from Central Bank is better than dependent DIS. This decides favorite DI design. Besides, it is capacity, transparency, clear regulation etc… that attribute to prompt and in-good- order failure resolution. Dr. Vo Tri Thanh argued
Scope of DI activities shall be of more contents and stipulated in a separate bigger part in Law on Deposit Insurance to be built by the National Assembly in the upcoming time. Simply, “basis” for us to build Law on Deposit Insurance is better consistent with international practices, particularly in clear integration environment and current situation of development process of Vietnam” - Dr. Cao Sy Kiem added.
With reference to state management of deposit insurance, frankly speaking concerned agencies wanted to submit three draft laws simultaneously, say Law on State Bank, Law on Credit organizations, and Law on Deposit Insurance. In fact, we could not prepare well enough so we submit the two former in this Session. Thus, in the bill, there is a paragraph, possibly saying one or two, which express state management of deposit insurance in accordance with the Government’s regulations, DI legislation. It means that the Government decides regulations if currently no such law. When there exists law on deposit insurance, the Government’s regulations shall be no more valid and it shall be stipulated clearly in applicable guiding documents in line with the law on deposit insurance. In that case, Governmental Decree shall be also a legal document.
(Mr. Nguyen Duc Kien - Deputy Chairman of the National Assembly)
* Building law on deposit insurance - depositors shall be better protected
Dr. Cao Sy Kiem’s opinion stressed that, “on the basis of initial achievements, we should sum up what have been done and what have not in comparison with committed requirements of international DI and common integration trend. We shall make an appropriate DI design on basis of practical experiences of various countries but with focus on the current situation of Vietnam. We need to build law on deposit insurance to promptly coordinate with other relative agencies. Therefore, DI possibly bring into play advantages, simultaneously contribute critically to financial system”.
“It is vital to build law on deposit insurance at the current situation because it shall create important legal corridor to better protect depositors”, Dr. Dinh Xuan Thao, the head of the Institute of Legal research of the National Assembly’s Standing Committee said.
Dr. Vo Tri Thanh expressed: “My first expectation is that there is an appropriate legal foundation of which DI shall be of its own role in order to implement applicable functions. Secondly, DI should improve their capacity. Thirdly, DI came into being not aiming at serving themselves but people and society in such a way that public can further comprehend DIS, by which it helps create public confidence in development and stability of Vietnamese financial system”.
In almost all countries, law on deposit insurance has been established before the birth of DI agency. At the same time, role of DI has been recognized by the economy. Thus, these nations have paid a special attention to adjusting DI policy in a line with current conditions in order for protecting better people’s rights and benefits.
(Dr. Duong Thu Huong – General Secretary of VNBA)
The legal system on depositors protection is currently lacking consistency and of many inappropriate contents comparing with the current facts , such as unequal objects and scope of DI in financial market, no promotion on attracting foreign currency, low coverage limit; supervisory mechanism against international standards, no clear regulations on functions, obligations of DIV. Coordination among players in supervisory system is out of date; operation of financial assistance, receivership – resolution is lacking legal foundation and consistent mechanism, compulsory measures is poor, liquidation of failed depository organizations is not clearly stipulated... Therefore, building law on deposit insurance is an urgent task, which addresses appropriate contents in accordance with the current situation of Vietnam and in line with international practices.
(Mr. Dang Van Chien, Deputy Chairman of the Committee of Legal Affairs of the National Assembly, concurrently deputy)
What do National Assemly members and financial specialists judge deposit insurance?
In the post-crisis stage, many countries throughout the world do their endeavor in making comprehensive financial reform, increasing supervision on all lenders and even commercial banks, simultaneously furthering protection measures for financial service users, especially depositors. The National Assembly of Vietnam is under process of pushing up legal system improving progress that helps protect consumers in general, and financial service users in particular.