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Examination results at PCFs under the direction of the SBV Governor in the past 5 years
From 2019 till now, in addition to implementing the DIV annual examination plan approved by the Board of Directors (DIV annually conducts examinations for 350 insured institutions on average), DIV also conducts examinations at PCFs under the direction of the SBV Governor. Accordingly, 2019 is the first year that DIV was assigned to pilot examination at 6 PCFs under the direction of the Governor. The examination results have received recognition and appreciation from the SBV.
From these positive results, the SBV continues to assign the DIV to conduct examinations at PCF with the increasing number and content of examinations over the years. By 2023, DIV was assigned to examine 60 PCFs (10 times more than the number in 2019). Thus, the total number of PCFs that DIV has examined from 2019 to present is 159 PCFs. The assigned examination contents include: (i) Checking the management and use of important prints; (ii) Checking savings deposit mobilization activities; (iii) Checking the compliance with regulations on limits and safety ratios in operations; (iv) Checking lending activities. In addition, in 2023, the SBV also assigned the DIV to pilot the use of the STEP Project's Internal Audit Toolkit for a number of PCFs.
During the 5 years that the SBV assigned the DIV to support the examination function from 2019, it is also the time when the Covid-19 epidemic began to appear in Vietnam, breaking out and developing complicatedly until the end of 2022. Meanwhile, some examination contents are complex and sensitive. This poses significant difficulties and challenges in implementing examination, especially direct comparison with deposit customers and loan customers in areas with complicated epidemic developments. However, with the attention of the leaders of the DIV, along with the efforts and determination to complete the tasks assigned by the SBV, the DIV has completed 100% examination of the assigned plan, ensuring correct content and required time.
The examination implementation was carefully and methodically prepared
Immediately after receiving the directive from the SBV and the guidance document from the Banking Examination and Supervision Agency (BSA), DIV immediately implemented the development of an examination implementation plan; Issue guiding documents on the implementation of examination to unify implementation throughout the system.
At the same time, every year, the DIV organizes a conference to summarize the examination of PCFs at the request of the SBV and implement examination tasks, inviting leaders and experienced staff of the BSA to train, guide and share experiences in examination work at PCF for officials expected to participate in examination teams. In addition, the DIV sends a plan to implement examination work at the request of the SBV to the BSA and SBV branches at provinces/cities with PCFs assigned to examine to coordinate in performing the tasks assigned by the SBV.
The examination units also have good preparation for examination work such as selecting officers to join the examination team, organizing work with the SBV provincial and city branches and PCFs to exchange and share experience, collecting data for examination. Some examination units conduct direct surveys at the unit to understand the operating situation at the unit, the economic - political - social situation in the locality to develop a plan for direct comparison of deposits, suitable and effective loan.
The achievements
Thanks to the careful and methodical preparation at all stages of the examination process, along with the close attention and direction of the leaders of the SBV and DIV, the efforts of the examination team and examination activities of the DIV at PCFs under the direction of the SBV in particular as well as for insured institutions in general have achieved certain results.
Firstly, through the examination work of the DIV, shortcomings and errors have been pointed out in the implementation of the provisions of law on deposit insurance as well as other relevant regulations of the SBV on deposit mobilization and related management and use of important prints, capital mobilization, lending and compliance with safety ratios in operations. The analysis and assessment of the DIV has since then clearly pointed out the causes and responsibilities of relevant individuals and departments, and on that basis, made recommendations appropriate to each subject of examination as well as the SBV to have a solution for timely correction, remedial and handling measures.
Secondly, the examination activities of DIV through the implementation process have become an important information channel, objectively assessing the actual status of operations and compliance with legal regulations of the SBV and of DIV. After each examination, DIV sends conclusions and examination reports to the BSA/SBV branches in provinces and cities for handling according to the provisions of Law on Deposit Insurance. Thereby, the SBV recognized and highly appreciated the examination results and the coordination and participation in supporting the examination function for PCF of the DIV.
Thirdly, through examination, DIV also discovered unreasonable mechanisms and policies to make suggestions and recommendations to competent authorities to make appropriate corrections and supplements to strengthen management and create conditions for safe and healthy development of insured institutions.
Fourthly, through examination work at insured institutions, it has contributed to communicating and disseminating deposit insurance policy to insured institutions, effectively influencing the raising of awareness of deposit insurance policy and voluntarily comply with the provisions of the law on deposit insurance and the regulations and instructions of the DIV, minimizing many errors and omissions; consolidate and strengthen the cooperative relationship and coordination between DIV and examined units.
Fifthly, the examination staff is becoming more and more mature in terms of professionalism and work experience. Despite working with high work pressure, a tight work schedule, and often having to work long days in remote areas, the examination staff of the DIV always make efforts and determination to complete the given mission. At the same time, DIV's staff are always proactive in research and have initiatives; the examination work is conducted strictly, fully, promptly and shortens working time while still ensuring quality and safety to complete assigned tasks well.
DIV’s examination implementation plan in 2024
In 2024, DIV continues to be assigned by the SBV to examine 75 PCFs (nearly 50% of the number of PCFs assigned in the past 5 years) in 30 provinces/cities across the country. At the same time, DIV carries out examination for 253 insured institutions (including 26 banks, 227 PCFs) according to the 2024 periodic examination plan approved by DIV Board of directors.
Based on the Resolution of the DIV Board of Directors on the plan to implement examination of PCFs at the request of the SBV in 2024, the DIV organized a Conference to implement the examination of PCFs at the request of the SBV on 28 February 2024. In particular, the BSA discussed, shared, and answered problems that arose during the examination of PCFs under the direction of the State Bank for examination officers nationwide. system. Relevant units of DIV also discussed and answered issues related to examination work such as: information sharing issues; coordination and recruitment of officials to join the examination team from professional departments; providing necessary equipments and resources for examination...
At the same time, DIV General Director issued documents guiding and directing examination work to perform synchronously and consistently throughout the system. This includes directing the implementation of examination of PCFs at the request of the SBV; assign units to perform examination; organize examination team; instructions on the order and procedures for conducting examinations; process for checking contents as required by the SBV; information and reporting regime... especially coordination with the SBV provincial/city branches in sanctioning administrative violations in the field of currency and banking or serious violations of law. The DIV General Director also directed examination units to focus resources and urgently deploy examination work to soon complete the examination plan for 75 assigned PCFs, reporting to the SBV before December 15, 2024.
Regarding examination work according to the 2024 Periodic Examination Plan of DIV approved by the Board of Directors, in order to continue to improve and enhance the quality of examination work, the General Director has also issued a document regarding some issues that need to be noted in the examination work, examination units are required to thoroughly grasp and implement a number of contents such as: fully examining the contents according to the instructions under Document No.1723/HD of the DIV General Director on guidance on implementing the examination regulations of the DIV for insured institutions; complying with the SBV's requirements on recommendations and handling of violations discovered through examination; notes on reporting examination results of DIV branches; reporting examination results and monitoring and urging after examination, reporting the results of implementing examination conclusions for examination subjects supported/coordinated in examination; and adjusting the examination plan...
Implementing the direction of the General Director, the units carrying out the examination work of the DIV have proactively developed implementation plans, allocated resources, urgently carried out preparations, contacted and coordinated closely with the SBV branches where the PCFs are assigned to examine to be ready and carry out the examination from the beginning of March 2024.
Some recommendations and solutions
Based on the examination results, in addition to making recommendations to the examined units, DIV also reviewed, researched and made practical recommendations and proposals to competent State agencies on issues that need to be amended and supplemented in terms of mechanisms and policies for PCFs in particular as well as the PCF system in general to contribute to ensuring safe and healthy operations as well as ensuring the legal rights of depositors, specifically:
Recommendations on mechanism and policy
(i) Regarding regulations related to the admission of members of the PCFs: DIV recommends that the SBV consider amending and supplementing regulations on admission to simplify requirements and procedures while still ensuring request to improve the quality of member admission approval. This is to facilitate the membership development activities of the PCF, as well as promptly meet the capital needs for production, business and people's lives. Accordingly, the Law on credit institutions 2024 passed by the National Assembly on January 18, 2024 allows the Board of Directors of PCFs to admit members and report to the members' congress.
(ii) Regarding developing and improving the quality of members of PCFs: To develop and improve the quality of members of PCFs in a sustainable way, it is recommended that the SBV orient PCFs to implement useful programs to attract people to voluntarily join the PCF, such as preferential policies for members on interest rates...
(iii) Proposal to develop a separate Law for the system of credit Institutions based on the cooperative model: DIV proposes that the SBV with the long-term goal of building a separate law system for the PCF system to create a legal corridor unify the operation of the PCF system.
(iv) Regarding the activities of the Special control board of PCFs: DIV recommends that the SBV strengthens training and improves professional qualifications for the board; improve the effectiveness of the board in PCF activities.
Some solutions to strengthen the PCF system
To continue strengthening the PCF system in a competitive and digitally transformed environment, DIV proposes a number of solutions such as:
(i) Build a synchronous information technology (IT) system for PCFs. According to a survey by DIV, currently PCFs are using many types of software from different suppliers, some of which do not really meet the requirements for internal administration and implementation of operations. Therefore, it is necessary to build a unified IT and software system for PCFs to achieve the common goal of supporting PCFs to improve the quality of operations, service provision as well as standardized information and data. Storing data and transmitting reports to strengthen the management and supervision of the SBV with the PCFs and information sharing between the SBV, the DIV, and the Cooperative Bank.
Besides, the Cooperative Bank needs to better perform its role as the central bank of the PCF system; actively deploy digital banking applications and services for PCFs and members; support PCFs to upgrade and synchronize technology infrastructure, data, human resource training... contributing to improving the IT system for the PCF system in the area. At the same time, the PCF system needs to coordinate closely with the Cooperative Bank and reserve certain financial resources to invest in technology innovation, gradually providing and developing digital banking services suitable to the conditions of the PCFs.
(ii) Diversify products and services: DIV proposes to diversify products and services at PCFs, and at the same time have preferential policies for products and services to attract customers to become members and demonstrates one of the basic principles of PCFs, which is profit distribution based on the use of products and services. This is one of the effective solutions to help PCFs attract more customers in the context of increasing competitive pressure from other credit institutions operating in the same area.
(iii) Promote training and consulting on strategies for PCFs so that PCFs understand how to build development strategies in general and product and service strategies in particular. To do this, the Cooperative Bank and the Association of PCFs need to further promote training and consulting work while each PCF develops its own appropriate staff training plans and strategies.
(iv) Encourage PCFs to apply the Internal Audit Toolkit designed by the STEP Project: Through pilot implementation and evaluation of this Toolkit for a number of PCFs under the direction of the Governor of the SBV, DIV realizes the application of the Toolkit by the Special control board and internal audit staff to monitor, examine and evaluate the activities of the PCFs will basically detect shortcomings and errors in operations so that there can be solutions and recommend to the Board of Directors and Executive Board to correct in a timely manner. However, most PCFs have not applied or partially applied the Toolkit because there are no mandatory mechanisms and regulations. Therefore, DIV proposes that the SBV have mechanisms and regulations to encourage PCFs to apply the Internal Audit Toolkit designed by the STEP Project to improve the quality and efficiency of the internal control, internal audit and to prevent, detect and promptly handle risks, ensuring that PCF operates safely and in accordance with the law.
By determining that the examination of PCFs at the request of the SBV is a key and regular task, based on the results achieved in recent times, along with the attention and direction of the SBV and the Board of Directors of DIV, with the efforts of examination staff and officials from relevant departments, DIV continues to strive to successfully complete the tasks assigned by the Prime Minister and the SBV Governor. Thereby, enhancing the role of DIV in the process of restructuring the PCF system, contributing to maintaining the stability of the system of credit institutions, ensuring the safe and healthy development of banking activities.
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