On December 30, 2022, Deputy Prime Minister Le Minh Khai signed Decision No.1660/QD-TTg approving the Strategy on Deposit Insurance Development by 2025, with orientations to 2030.
Improving operational quality, protecting depositors’ rights and interests
The overall goals of the Strategy are to protect the legitimate rights and interests of depositors, contributing to maintaining the stability of the credit institution system and ensuring the safe and sound banking operations.
The Strategy is aimed to improve the quality and the efficiency in deposit insurance operations, including the certification of participation in the deposit insurance scheme; the information to be reported; the supervision, inspection, and special control measures; the detection and early warnings of potential risks to the insured institutions; the effective participation in the restructuring of a poor-performing insured institution; the calculation and the collection of deposit insurance fees; the management of the capital and the investment; the communication of deposit insurance policies; the payment of deposit insurance claims in accordance with the international practices and Vietnamese applicable laws.
The Strategy is also expected to enhance the financial capacity of Deposit Insurance of Vietnam (DIV), in order to re-affirm the commitments of the State and enhance the depositors’ confidence in the deposit insurance policy.
The specific objectives of the Strategy include: striving to raise the ratio of fully insured depositors over the total number of insured depositors to between 92% to 95%, ensuring alignment with the international practices; shortening the actual payment period from the time of arising the insurance payment obligation to maximum 30 working days by 2025, and to maximum 15 working days by 2030 in order to help depositors to access their deposits at an early stage when the insured institution is resolved; and achieving the target of 45% of depositors understanding about the core substances of the deposit insurance policy by 2025, and raising this ratio to 55% by 2030.
Improving the legal frameworks, policies and operations for deposit insurance
The Strategy mentions the key tasks, solutions and an implementation roadmap focusing on three areas, namely: improving the legal frameworks; improving the policies; and enhancing the operations for deposit insurance. Specifically, in order to strengthen the efficiency of deposit insurance payment and asset liquidation, the Strategy specifies the following tasks and measures:
- Amending and supplementing the Law on Deposit Insurance in order to enhance the coordination responsibility between the deposit insurer and related agencies; creating a legal corridor for the deposit insurer to participate in the liquidation of the insured's assets in order to maximize the recovered value;
- Developing and practicing contingency plans for payments for each type of institutions participating in deposit insurance;
- Developing a payment manual for each type of institutions participating in deposit insurance in order to standardize the payment process, diversifying the forms of payment, applying information technology in the payment of deposit insurance in order to shorten the actual payment time;
- Increasing the charter capital for the deposit insurer to VND 10,000 billion by 2025 and VND 15,000 billion by 2030 from the self-accumulated funds and other legitimate capital sources to ensure the financial capacity of the deposit insurer;
- Strengthening the financial capacity by allowing the deposit insurer to diversify the investment forms and portfolios;
- Supplementing the form of borrowing from the State Bank of Vietnam in case that the capital of the deposit insurer is insufficient to pay the insurance claims;
- Developing a scheme to access additional capital sources in case the deposit insurer's capital is temporarily insufficient to pay the insurance claims.
Responsibilities for the organization and implementation of the Strategy
In this Decision, the Prime Minister has assigned the SBV to assume the leading role in coordinating with the relevant Ministries and agencies to provide guidance, monitor, supervise and evaluate the implementation of the Strategy.
The Prime Minister has also assigned Deposit Insurance of Vietnam (DIV) to proactively organize the synchronous implementation of the tasks and measures to achieve the objectives and the roadmap as stated in the Strategy, in alignment with the Development Strategy of Vietnam Banking Sector, and in compliance with the applicable laws; develop its own Action Plan to implement the substances mentioned in the Strategy; submit annual reports to the SBV on the implementation results of the tasks, the measures and the objectives of the Strategy in each period, etc.
Le Hang