Trang Chủ
Representative of Administration Office reported on the July activities of professional operations, policy, administration, and the working plan for August.
The General Director required department directors to report and assess their operations based on banking system analysis, especially legal issues arising after the enforcement of the Law on Deposit Insurance for appropriate and effective policy recommendation.
Legal obstacles
- As for micro-finance institutions
According to Supervision Department 2, the Deposit Insurance Law stipulates micro-finance institutions’ compulsory participation in deposit insurance. At present, micro-finance institutions subject to the Decree No.28 are small-sized ones. However, in fact, there exist large micro-finance institutions with total capital of up to hundreds of billion dongs but still regulated by the Decree No.28 as small institutions. Therefore the regulations on this are improper.
- As for the payout of deposit insurance
Regarding the regulations on the payout, according to Deposit Insurance Law, the duty of deposit insurance payment arises at the time when the State Bank of Viet Nam (SBV) issues an announcement to terminate special control or terminate the application of measures to rehabilitate solvency of an insured institution or does not apply these measures, and the insured institution is, however, still in bankruptcy; or when the SBV makes a notice of the institution’s insolvency. In addition, the Decree 05/2010/NĐ-CP guiding the implementation of Bankruptcy Law for credit institutions is quite complicated. In fact, there has not been any case of credit institution insolvency and payout of deposit insurance made according to bankruptcy procedure. Also, there has not been any specific regulation clarifying whether the SBV or the Court shall make the confirmation of bankruptcy, which results in unclear timing of DIV’s payout. This causes difficulties in implementing deposit insurance policy and may affect the benefits of depositors and induce abuse of deposit insurance policy if unsolved.
- As for cooperative banks, Deputy General Director Nguyen Dinh Luu said that through continuous supervision and examination of credit funds, some legal matters have been detected on such areas as human resource management, risk management of the credit fund system. If no effective measures will be taken, the safety of the whole system can be adversely influenced.
Deputy General Director Nguyen Nhu Minh stressed that legal framework for granting and changing deposit insurance certificate should be clear and specific, so that DIV can strictly follows the regulations. Up to now, the legal basis of granting and changing deposit insurance certificate has been Decree No. 89 and Decree No.109. In fact, the Deposit Insurance Law has already come into effect while some regulations in these documents have not expired yet. According to Mr. Minh, all deposit insurance certificates should be changed as the new law has been enforced. In other hand, when the Cooperative Bank came into operation, deposit insurance certificates should have been replaced immediately. However, there has not been a unified and formalized content on the certificate.
DIV should be active in counseling deposit insurance policy
The BOD Chairman Nguyen Van Thanh reported on the progress of building by-laws guiding the implementation of the Deposit Insurance Law. Specifically, the SBV has submitted to the Prime Minister draft decision on the establishment of the Deposit Insurance of Vietnam its charter. At present, the SBV is considering a decision on DIV’s organizational structure and circular guiding professional activities. DIV has compiled opinions and suggestions of its all departments into a document as a contribution to the building of draft charter of DIV, which recommends preserving the basic organizational structure, branches, and departments at head-quarter and proposes setting up some new departments. A draft circular on financial regime of DIV is also prepared by the Ministry of Finance.
The General Director has instructed all departments/branches that DIV is the body whose task is to implement deposit insurance policy. Thus, during the implementation of assigned tasks, DIV staff should detect all shortcomings and obstacles and report them to the BOD in order to create a basis for suggestions to relevant agencies on building and improving deposit insurance policy.
The departments/branches should study current legal framework, actual implementation, international experiences regarding some issues such as cooperative banks, micro-finance institutions, bad debt resolution, information exchange between SBV and DIV. Particularly, regarding the sharing of information on banking supervision between SBV and DIV, the General Director stressed that relevant departments should be active in working with SBV’s Banking Supervision and Examination Agency in order to create an effective information exchange regime, which would be helpful for the banking system and the DIV’ operation. The General Director also asked departments/branches to proactively, hold meetings for gathering opinions, suggestions on contents of deposit insurance policy and then make reports to the BOD.
Regarding abuse of deposit insurance policy, the General Director directed that it is necessary to study how to avoid cases where some credit institutions fail due to their managers and executives’ faults but state authorities reimburse depositors or bear risks and losses.
- The Legal Department should thoroughly review all current legal documents, Deposit Insurance Law and Decree No.68 to recommend documents which should be newly issued or amended and supplemented; group issues, assign relevant departments, officials to be responsible for gathering opinions, recommendations from departments/branches and BOD on these grouped issues, especially on the drafted documents such as the circular on financial regime of DIV, decisions on functions and tasks of DIV’s departments/branches and other guiding documents.
- As for administrative operation, General Director asked departments/braches to actively fulfill their assigned tasks according to rules and regulations of DIV.
- As for activities related to the Party and unions, assigned departments should co-operate closely in holding the training course on Party-related professional skills as planned in the mid-August in Nghe An.
Translated by the Department of Research and International Affairs
