Deposit Insurance of Vietnam

Attempts for better depositor protection

10:50 | 17/08/2017 Economy- Society

(VEN) - Following the development strategy for the banking system, Deposit Insurance of Vietnam (DIV) has taken active stepsto successfully fulfill its duty to protect the benefits of depositors, thus contributing to ensuring bank operation safety and getting ready to participate more in the restructuring of credit institutions.  

attempts for better depositor protection
A DIV conference on the implementation of tasks for the last six months of this year

Deposit insurance policies proved effectivein the first half of 2017

According to the report for the first six months and the plan for the last six months of 2017, DIV has proposed that the State Bank of Vietnam (SBV) amend some of the existing regulations on streamlining its organizational structure and activities.It also gave remark on the draft law amending and supplementing the Law on Credit institutions and the National Assembly’s Resolution to deal with bad debts of credit institutions on a trial basis.

In this period of drastic restructuring of credit institutions, DIV actively researched and proposed to increase the insurance premium limit, which was reported to SBV for consideration and submitted to the Prime Minister for approval. On June 15, 2017, the Prime Minister signed the Decision No. 21/2017/QD-TTg on insurance premium limit. Accordingly, the new insurance premium limit is VND75 million (an increase of VND25 million compared to the current insurance premium limit). This new deposit insurance limit ensures the harmony of economic benefits, which helps to raise public confidence in the national financial and banking system; at the same time to strengthen DIV’s rolein the restructuring of the credit institution system. DIV has taken many initiatives in developing its development strategy in line with DI policies as well as Decision No. 21.

DIV’s professional activities have been implemented synchronously in compliance with the law. These include granting and revoking certificates of deposit insurance participation, collecting deposit insurance premiums from insured institutions, managing, using and preserving deposit insurance funds, making deposit insurance payouts to insured depositors, monitoring and making recommendations to the State Bank of Vietnam in dealing with violations of the prudential regulations on banking operations and risks causing insecurity to the banking system, etc.

In the first half of 2017, DIV granted and re-granted 374 certificates of deposit insurance and copied certificates of deposit insurance, revoked one certificate of deposit insurance and modified 66 certificates of deposit insurance. Simultaneously, DIV has timely granted certificates and copied certificates of deposit insurance after Decision No. 21/2017/QD-TTg took effect on June 15, 2017, raising the deposit insurance premium limit.

As of the end of June 2017, DIV’s total assets amounted to more than VND33 trillion, a 19.2 percent increase year on year. DIV is entitled to invest its temporally idle capital in government bonds.

DIV has also paidgreat attention to on-site examination. In the first half of 2017, DIV completed on-site examination of 141 insured institutions, including 123 people’s credit funds and 18 commercial banks, thus fulfilling the on-site examination plan for the first half of the year.

DIV has continued promoting communication activities such as distributing leaflets, running communication campaigns at credit institutions, posting articles on prestigious newspapers and magazines, updating DI activities in Vietnam and the world on DIV newsletter released quarterly and on DIV’s website. In addition, DIV has coordinated with SBV and other media agencies to develop communication plans on popular TV programs such as “Law and Life” of the Department of Science and Education on VTV2, Bank and Finance news on the Nhan Dan channel, etc. In particular, DIV has expanded its communication activities with the new deposit insurance premium limit.

Apart from professional activities, DIV has also focused on developing supporting activities to improve the efficiency of the whole system. In the beginning of 2017, DIV put into operation the HW-SW management system. Besides, DIV has coordinated with related parties to make a report on termination of services and to carry out procedures for checking and liquidation of contracts within the framework of the Banking Sector Modernization project – DIV component (FSMIMS Project).

DIV has actively participated in joint research of the International Association of Deposit Insurers (IADI) and surveys of the Asia Pacific Regional Committee (APRC). It has joined programs with many national and international financial institutions, held a seminar on deposit insurance with the Depositor Protection Fund (DPF) of Lao PDR in Vietnam and coordinated with SBV to welcome the Central Bank of Cambodia to Vietnam. In addition, DIV has been actively preparing to host the APRC 2018 annual meeting in Vietnam.

DIV’s role strengthened in the process of credit institution restructuring

Based on the guidance of the Government and SBV, the Banking Sector Action program, DIV’s tasks and work plan for 2017, , DIV has set major targets for the last six months of the year, focusing on renovating DIV’s direction and administrationto further improve management capacity, effectiveness and transparency,following the Development Strategy to 2020 with Vision towards 2025.

At the same time, DIV expects to propose that SBV ask the Prime Minister to revise the Law on Credit Institutions in order for DIV to involve more in the restructuring of credit institutions.

DIV will also continue to fully and effectively implement its functions. Especially, DIV will take the initiative in synchronously implementing its professional activities in accordance with Decision No. 21/2017/QD-TTg dated June 15, 2017 on increasing thedeposit insurance premium limit. In the meantime, DIV will focus on disseminating the new deposit insurance premium limit, develop various communication channels to enhance public access in remote areas. Additionally, DIV expects to effectively invest, usingtemporally idle capital, while at the same timecontinuing to build its financial capacity in accordance with the 2017 financial plan.It will soon draw up a financial plan for 2017 for its own and send it to the Ministry of Finance and SBV for approval.

Implementing SBV’s economy practice policyis one of DIV’s key tasks. Accordingly, DIV strives to save at least five percent of costs,while meeting requirements of the banking systemand complete its work plan.

DIV is determined to promote human resources development in line with the development of the banking system in Vietnam.

In order to keep pace with the development of information technology and globalization, DIV prioritizes building and upgrading its information technology system and software applications and making use of FSMIMS project modules in order to gradually apply international standards in its operation.

Ngoc Anh