Deposit insurance effectively protects depositors

11:10 | 12/12/2017 Finance - Banking

(VEN) - Deposit insurance is a measure implemented by deposit insurers to protect depositors and contribute to ensuring safe, healthy development of the banking system. Under Prime Ministerial Decision 21/2017/QD-TTg, the maximum deposit insurance coverage limit is VND75 million, including principal and interest. The Law on Deposit Insurance stipulates that insured deposits exceeding the coverage limit will be treated in the process of dealing with the assets of insured institutions.

deposit insurance effectively protects depositors

Deposit Insurance of Vietnam (DIV) is a non-profit financial institution established by the government. It works to bring to life party and state policies designed to ensure social security in the field of finance and banking, which are called deposit insurance policies. The 2012 Law on Deposit Insurance stipulates that deposit insurance aims to protect the rights and legitimate interests of depositors, contributing to maintaining the stability of credit institutions, as well as safe and healthy operations of the banking system.

Along with paying insurance, DIV also provides depositors with indirect protection through other technical operations. Specifically, it carries out monthly, quarterly and yearly inspections at insured institutions in order to find their shortcomings and violations of deposit insurance regulations. DIV will give warnings to insured institutions and report to the State Bank of Vietnam. DIV also disseminates information to make the public and insured institutions aware of deposit insurance policies.

When National Assembly deputies discussed draft amendments and supplements to some articles of the Law on Credit Institutions, State Bank of Vietnam Governor Le Minh Hung said under the government’s guidance, it is necessary to carefully assess the impact of bankruptcy on the safety of the entire system, as well as the risks it may cause for the entire economy, in order to protect the rights and legitimate interests of depositors. The government and the State Bank of Vietnam wish that the National Assembly will consider raising the VND75 million deposit insurance coverage limit in specific cases depending on actual budget conditions.

DIV will not use the state budget but other state financial resources to implement its tasks.

DIV has been assigned to implement deposit insurance policies. It is a member of the national financial safety net, and one of the government’s tools to protect depositors and maintain system safety. Other tools include macroeconomic policies. The central bank plays the role of a “lender of last resort” to help improve the solvency of credit institutions, while at the same time monitoring banking operations and tax policies to ensure safety and efficiency of the banking system.

Ngoc Anh