ANTD.VN - The State Bank of Vietnam is seeking opinions on the proposal to draft the Law on Deposit Insurance (amended). Of which, a notable content is related to the participation of Deposit Insurance in the process of handling weak credit institutions; regulations on insurance payment in case of bankruptcy of credit institutions...
Can pay full insured deposit to customer
The Law on Credit Institutions (CIs) 2024 has added regulations on handling cases where CIs are subject to mass withdrawals, including a number of response measures from CIs themselves and measures from management agencies.
However, according to the State Bank, to respond to the crisis, there needs to be a comprehensive mechanism of many measures, including the participation of the Deposit Insurance Organization.
Therefore, in the Draft, the State Bank proposes many regulations for the Deposit Insurance to participate more deeply in the restructuring process of weak credit institutions.
Specifically, supplement detailed regulations on the organization of Deposit Insurance for special loans to specially controlled credit institutions to implement recovery plans and compulsory transfer plans;
Supplementing regulations on Vietnam Deposit Insurance to decide on special loans for specially controlled credit institutions that have lost or are at risk of losing their ability to pay deposits to depositors and to borrow special loans from the State Bank when capital sources are temporarily insufficient to lend to support payments...
Research and supplement mechanisms for the Deposit Insurance Organization to participate more deeply in the restructuring process of credit institutions; Supplement mechanisms to utilize the resources of the Vietnam Deposit Insurance in the process of handling incidents and crises in the operations of credit institutions, avoiding the risk of systemic spread...
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It is necessary to improve the financial capacity of the Deposit Insurance of Vietnam. |
Regarding the regulations on insurance payment, the Draft also proposes to amend and supplement the regulations allowing the Deposit Insurance to participate earlier in paying depositors at weak credit institutions.
In particular, the Draft supplements the provision that in special cases, the Prime Minister decides to pay all insured deposits of depositors at deposit insurance participating organizations when the obligation to pay insurance premiums arises at the request of the State Bank.
According to the drafting agency, this proposal aims to avoid chain reactions and mass withdrawals of depositors, minimizing liquidity risks of credit institutions.
Enhancing the financial capacity of Deposit Insurance
However, in addition to the positive impacts, the State Bank believes that paying all insured deposits to depositors requires the Deposit Insurance Organization to improve its financial capacity to meet new requirements and tasks.
Therefore, in the Draft, the State Bank also proposes many new mechanisms and policies to improve the efficiency and financial capacity of the Deposit Insurance organization.
According to current legal regulations, Vietnam Deposit Insurance is only allowed to use temporarily idle capital to buy government bonds, SBV bills, and deposit money at SBV (financial investment).
According to the State Bank of Vietnam, by September 2024, the investment amount was VND119,072 billion, accounting for 97.77% of the total capital (VND121,783 billion). The interest earned from this activity is recorded in two parts: one part is included in revenue to offset annual operating costs (approved by the Ministry of Finance, ranging from 17.5% -22%); the remaining part is included in the Operational Reserve Fund (78%).
With the current mechanism, the accumulation of the Development Investment Fund is very limited. In the past 5 years, investment interest income has been about 2,500 billion VND to 3,600 billion VND/year. However, every year the Ministry of Finance determines the income deduction rate to fluctuate from 17.5% - 22% of the total interest. After covering expenses, the difference between revenue and expenditure is very low, the amount set aside for the Development Investment Fund is about 40 billion VND to 65 billion VND/year.
According to the State Bank of Vietnam, if following the current mechanism, it is expected that by 2030 the Development Investment Fund will only reach VND 1,250 billion, which will not meet the target of increasing charter capital according to the strategy of the Deposit Insurance of Vietnam to increase by VND 15,000 billion (currently charter capital is VND 5,000 billion).
Currently, the capital to supplement the charter capital for the Deposit Insurance comes from only two sources: the State budget and the accumulated capital from the Development Investment Fund. However, according to the State's direction, the budget will not be supplemented to supplement the charter capital, but the Development Investment Fund will be used to supplement.
Therefore, with the current mechanism, it is very difficult for the Deposit Insurance of Vietnam to increase the scale of equity in the future. Therefore, it is necessary to complete the legal regulations on the financial regime of the Deposit Insurance organization in the Law, handle difficulties and obstacles, and create conditions for the Deposit Insurance organization to improve its financial capacity.
The State Bank of Vietnam proposes to amend and supplement regulations on operating capital sources of the Deposit Insurance Organization, including: Charter capital of the Deposit Insurance Organization provided by the State; Loan capital; Operational reserve fund; Development investment fund; Financial reserve fund; Other legal capital according to the provisions of law.
At the same time, amend and supplement in the direction of expanding the form of investment to increase the scale of the Operational Reserve Fund. Accordingly, the Deposit Insurance Organization is allowed to use temporarily idle capital to buy and sell government bonds, local government bonds, and SBV bills; buy and sell bonds and deposit certificates issued by state-owned commercial banks and joint-stock commercial banks with over 50% state capital; deposit money at the State Bank of Vietnam, state-owned commercial banks and joint-stock commercial banks with over 50% state capital.
Supplementing regulations on the Deposit Insurance Organization purchasing long-term bonds of credit institutions receiving compulsory transfers according to the decision of the State Bank.
Source: https://www.anninhthudo.vn/de-xuat-co-che-de-bao-hiem-tien-gui-co-the-chi-tra-toan-bo-tien-cho-khach-khi-ngan-hang-pha-san-post603937.antd
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