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Summarizing 12 years of implementation of the Law on Deposit Insurance, the SBV stated that the amendment of the Law on Deposit Insurance aims to ensure consistency and uniformity with related laws, creating a full and clear legal framework for the deposit insurer to effectively carry out its assigned tasks and participate more deeply in the restructuring of CIs.
Clause 13, Article 13 of the Law on Deposit Insurance stipulates the rights and obligations of the deposit insurer: to participate in the process of special control of insured institutions as prescribed by the SBV; to participate in the management and liquidation of assets of insured institutions as prescribed by the Government.
Meanwhile, the 2024 Law on Credit Institutions stipulates the participation of the deposit insurer in the restructuring of CIs such as: granting special loans to support credit institution repayments; coordinating with the Special Control Board and the Vietnam Cooperative Bank in evaluating the feasibility of rehabilitation plans for CIs under special control; coordinating with the Special Control Board in developing bankruptcy plans for CIs under special control; purchasing long-term bonds of the transferee in mandatory transfer cases as decided by the SBV.
Clause 2, Article 190 of the 2024 Law on Credit Institutions also supplements provisions that DIV may borrow specially from the SBV in cases where the amount in the professional reserve fund of the deposit insurer is insufficient to reimburse depositors after the credit institution bankruptcy plan is approved. This content has not been stipulated under the Law on Deposit Insurance.
Regarding the regulation on special loans of DIV, the 2024 Law on Credit Institutions does not stipulate specifically but refers to the Law on Deposit Insurance.
“This creates the need to amend the Law on Deposit Insurance to ensure consistency, uniformity, and feasibility in the implementation of regulations on the participation of DIV in the restructuring process of CIs,” the SBV emphasized.
On this basis, in the recent submission of the Draft Amended Law on Deposit Insurance to the Government, the SBV added a separate chapter in the Draft Law stipulating the participation of the deposit insurer in resolving CIs and in resolving incidents and crises in credit institution operations.
Accordingly, the deposit insurer shall grant special loans to insured institutions when the insured institution is subject to early intervention, placed under special control, and faces mass withdrawals; grant special loans to insured institutions under SC to implement rehabilitation plans or mandatory transfer plans. The Governor of the SBV shall regulate the provision of special loans by the deposit insurer to CIs.
The Draft Law also supplements mechanisms for supporting the reimbursement of insured deposits, thereby creating the basis for the deposit insurer to reimburse depositors earlier, ensuring system safety and stability, and protecting depositors’ rights. Specifically, the Draft Law stipulates that to ensure system safety and social order as prescribed in Clause 4, Article 162 of the Law on Credit Institutions, the SBV shall report to the Government to decide on requiring the deposit insurer to reimburse in cases where a CI under SC loses or is at risk of losing solvency. The deposit insurer shall be granted special loans from the SBV at 0% interest, without collateral, in cases where the amount in the professional reserve fund as prescribed in Clause 2, Article 30 of this Law is insufficient to reimburse; the deposit insurer shall develop a plan to increase deposit insurance premiums to offset the special borrowings, and use repayments from CIs, proceeds from the sale of securities held by the deposit insurer, liquidation of assets of CIs with special loans, and insurance premiums to prioritize repayment of special borrowings to the SBV. The Draft Law also supplements provisions on special loans from the SBV to the deposit insurer, authorizing the Governor of the SBV to provide guidance, and stipulating principles for handling special loans.
In addition, in practice, when risks arise that may spread and affect system safety, if there are no rapid and timely measures to stabilize depositor confidence, it will lead to a rapid chain collapse that is difficult to remedy. Accordingly, having special measures to respond to risks and prevent systemic crises is extremely necessary. The 2024 Law on Credit Institutions has supplemented provisions on resolving cases of mass withdrawals, including some response measures from the CI subject to mass withdrawals and measures from the supervisory authority.
However, to respond to crises, a comprehensive mechanism of multiple measures is necessary, including the participation of the deposit insurer, which should be supplemented in the Law on Deposit Insurance. On this basis, the Draft Law stipulates that in cases where incidents or crises arise that may pose a risk to the CI system's safety, the deposit insurer shall participate in handling such incidents and crises. The Government shall decide when incidents or crises arise and take necessary measures, including extraordinary measures outside the law, to handle incidents and crises, and report to the National Assembly at its nearest session.
The SBV stated that the above provisions are consistent with the policy content on improving legal regulations for DIV to participate in the restructuring of CIs in Vietnam, thereby contributing to better protection of the legitimate rights and interests of depositors.
Communication Department (Translation)
