Deposit Insurance of Vietnam: Six-month highlights

Depositor protection policy

DIV has taken the initiative in coordination with concerned ministries and sectors to issue 12 documents related to management, technical guidance, and operation regulation in the first six months and expects to basically finish this task in accordance with stipulations of the Law on Deposit Insurance by the end of this year.

The granting and withdrawal of deposit insurance participation certificates has been done on a timely basis, meeting the demand of 100 percent of participating organizations. So far, 1,252 credit institutions nationwide have been granted deposit insurance participation certificates. These include 92 commercial banks, one cooperative bank, 1,156 people’s credit funds, and three microfinance institutions. In the first half of 2016, DIV granted 388 certificates and certificate copies, withdrew 59 certificates and certificate copies, and adjusted information on 120 certificates of credit institutions.

Deposit insurance premiums collected from participating organizations reached more than VND2.3 trillion in the first six months of this year, a rise of 21 percent compared with the same period in 2015. Deposit insurance participating organizations have seriously calculated and paid premiums in accordance with current regulations. DIV has actively supervised, guided, answered questions, and dealt on a timely basis with violations in calculating and paying deposit insurance premiums.

The effective management of investment capital has contributed to the development of DIV’s capital resources and technical reserve fund, enhancing its financial capacity. By June 20, 2016, DIV’s working capital totaled more than VND30.66 trillion, a rise of 38 percent compared with the same time in 2015. Most of its temporarily unemployed capital has been invested in government bonds. In the first six months of this year, DIV collected total interest of more than VND1.09 trillion, an increase of 20 percent compared with the same period last year. DIV has improved its technical facilities to get ready for direct participation in government bond auctions.

Regarding payment of insured deposits, DIV has maintained its coordination with the Banking Inspection and Supervision Agency under the State Bank of Vietnam and its branches in provinces in grasping the actual situation and dealing with people’s credit funds facing the risk of falling into bankruptcy.

DIV has carried out monthly, quarterly, and annual inspections at 100 percent of credit institutions in order to find out on a timely basis their weaknesses and violations of regulations on the safety of banking activities to report to the State Bank of Vietnam. The data on the past six months show several violations of deposit insurance participating organizations in calculation and payment of deposit insurance premiums, due to wrong identification of currency kinds and insured depositor types.

DIV has promoted propaganda through a variety of activities such as distributing leaflets, writing articles to be published on major newspapers and magazines, and updating its website on deposit insurance activities in Vietnam and the world. It has organized for the first time a meeting to talk with students of the Hai Phong University, opening a new propaganda channel of high efficiency. Through these activities, DIV can disseminate deposit insurance policies and information about deposit insurance participating organizations as well as the range of insured deposits and other matters such as payment procedures and claims.

Along with technical activities, DIV has paid great attention to training, research, and international integration. It is gradually upgrading software programs to enhance the efficiency of its operations. Some components of the Financial Sector Modernization and Information Management System (FSMIMS) project has been handed over and put into operation.

Bringing into play the results it has achieved, DIV is concentrating on the implementation of major tasks for the second half of this year. Specifically, it is working together with the State Bank of Vietnam to draft circulars and regulations on the provision of information between the two sides. At the same time, it continues drafting a strategy for DIV development until 2020 with a vision towards 2025 for submission to the prime minister. In addition, it concentrates on inspecting, supervising, and dealing with people’s credit funds that currently face problems, and will take the initiative in applying new deposit insurance premiums and coverage limit after getting them approved.

Furthermore, DIV continues to upgrade its information technology system while promoting the application of international standards to improve the quality of operations. All of its staff members and workers are encouraged to participate in role-model movements to contribute to the development of the entire Vietnamese deposit insurance network.

Ngoc Anh