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Need to regulate a mechanism for adjusting the deposit insurance coverage limit.
According to current regulations, the maximum deposit insurance coverage limit is 125 million VND for individual at an insured institution. Many delegates said this deposit insurance coverage limit is still low and not suitable for the scale of deposits and current income. Therefore, increasing the deposit insurance coverage limit is necessary to better protect depositors' interests, especially amid frequent fluctuations in financial markets.
Delegate Nguyen Hai Nam (Hue City) stated that Vietnam's deposit insurance coverage limit is low compared to countries like Singapore and Malaysia, which exceed 1 billion. He recommended raising the limit to build trust and suggested the Government adjust the coverage limit every 3 years.Delegate Hoang Thi Doi (Son La) agreed that the 125 million VND limit is too low compared to bank operations and people's incomes. Delegate Thach Phuoc Binh (Vinh Long) also proposed increasing the coverage limit to 200-250 million VND to better protect depositors.
The draft Law stipulates that the Governor of the SBV may set limits each period. Delegate To Ai Vang (Can Tho) supports this for three reasons: it aligns with the Party’s decentralization policy, enables concise implementation, and allows SBV to respond quickly to changes. She recommends that the Government establish mechanisms to supervise and resolve violations for transparency and responsibility, and that, in the last six months of each year, the Governor publicly report decisions to the people and the National Assembly.
Delegate Hoang Thi Doi also proposed adding clear principles and grounds to the law, enabling the Governor of the SBV to determine the coverage limit. These bases, Delegate Hoang Thi Doi also proposed, should include clear principles, grounds, and a transparent adjustment mechanism in the law, enabling the Governor of the SBV to determine and periodically revise the coverage limit. These bases include: average income per capita, the size and value of deposits held by the majority of people, the financial capacity and size of the deposit insurance fund, and the safety level of the credit institution system, along with the goal of protecting depositors and stabilizing the financial system in line with the economic growth rate, average income, and inflation developments in each period.
Treatment of amounts exceeding the insurance coverage limit: Criteria should be clearly defined
The draft law also stipulates that in special cases, the Governor of the SBV shall decide on the Treatment of amounts exceeding the insurance coverage limit, up to the total insured deposits of depositors at the insured institution when the deposit insurance payout is triggered. This content has received the attention of many delegates.
According to delegate Hoang Thi Doi (Son La), the regulation of "special cases" will lead to the understanding that when a large-scale credit institution, Delegate Hoang Thi Doi (Son La) stated that the current regulation on "special cases" suggests that deposit insurers will only fully pay depositors at large commercial banks if those institutions fail. She argued that depositors at small credit funds in mountainous and difficult areas should also be covered. Ms. Doi proposed changing the wording from "in special cases" to "in case of necessity" to better protect depositors. Mended that the Government stipulate the basis for determining special cases requiring amounts exceeding the deposit insurance coverage limit, especially payouts for all insured deposits of depositors, and that, at the same time, a transparent approval process be established with the participation of relevant agencies. In addition, the Government needs to stipulate the principle of adjusting the deposit insurance coverage limit in accordance with average income, actual situation, and socio-economic development conditions at each stage to protect the legitimate rights and interests of depositors.
Delegate Thai Thi An Chung (Nghe An) suggested adding specific quantitative and qualitative criteria for exceptions, considering system impact, social effects, contagion risk, and urgent needs.
In general, National Assembly delegates all affirmed that the amendment of the limit mechanism must ensure the following factors: transparency, with a clear basis for adjusting the limit; flexibility to promptly respond to systemic risks; fairness, including for depositors at people's credit funds...
The deposit insurance coverage limit will be reviewed and adjusted in line with actual conditions.
Explaining the delegates' opinions on the deposit insurance coverage limit, Governor of SBV Nguyen Thi Hong stated that the adjustment mechanism depends on economic conditions, average insured deposit balances, and the fund's payment capacity. She clarified that these criteria may change, so the draft law authorizes the SBV to adapt the deposit insurance limit accordingly through a defined adjustment process to ensure flexibility and appropriateness.
In response to the National Assembly deputies' opinions, the SBV will direct the deposit insurer to review and propose a more appropriate deposit insurance coverage limit. In addition, the draft law proposes policies to strengthen the deposit insurer's financial capacity, thereby laying the groundwork for raising the deposit insurance limit to better protect depositors' interests.
Regarding the treatment of amounts exceeding the insurance coverage limit, the Governor emphasized that this is a measure applied in special situations to prevent a chain reaction of mass withdrawals and to protect depositors. The draft law stipulates that the Governor of the SBV is the person who decides on the level of amounts exceeding the insurance coverage limit in these cases.
Regarding the deposit insurance mechanism, according to Governor Nguyen Thi Hong, insuring the entire amount of depositors' money is a mechanism used by some countries to best protect depositors and prevent the effects of mass withdrawals on banking operations, as seen in the US in the first months of 2022. "Incorporating the opinions of National Assembly deputies, we will continue to coordinate with National Assembly agencies and research to clarify the criteria for determining special cases in the draft law," said the Governor.
Communication Department (translation)
