HÀ NỘI — Instead of waiting for credit institutions to declare bankruptcy, deposit insurance organisations will be able to pay depositors earlier in special cases and crises that pose a risk to the safety of the credit institution system, under draft amendments to the Law on Deposit Insurance.

The draft law was presented by State Bank of Vietnam (SBV) Governor Nguyễn Thị Hồng at a National Assembly (NA) Standing Committee meeting on Monday to discuss the proposed changes.

Hồng said that after taking effect 12 years ago, the Law on Deposit Insurance has new problems that need to be resolved, including clarifying the rights and obligations of participating parties, fees, limits and the timing of deposit insurance payments.

“The development of the amended Law on Deposit Insurance aims to create a complete and clear legal corridor for deposit insurance organisations to better protect the rights of depositors, ensuring the stability of the credit institution system and social safety,” she said.

Current regulations only allow the deposit insurance fund to pay when a credit institution goes bankrupt. However, this can lead to incidents like bank runs, the governor noted. The SBV needs a solution to stabilise the system, but cannot use money from the deposit insurance organisations.

She cited the mass withdrawal incident that took place at the Saigon Commercial Joint Stock Bank in 2022, following the arrest of major stakeholder Trương Mỹ Lan on fraud and corruption charges. At the time, the deposit insurance fund had nearly VNĐ100 trillion, but was unable to pay out due to the regulation.

“The draft law therefore proposes allowing deposit insurance organisations to give payouts to depositors sooner, instead of waiting until bankruptcy is declared, to ensure system safety,” Hồng explained.

According to Hồng, the draft law stipulates that deposit insurance organisations are allowed to provide special loans to organisations that participate in deposit insurance if they are subject to early intervention, special control and mass withdrawals, or to implement recovery plans and compulsory transfers. 

Deposit insurers are allowed to decide on special loans, including loans with or without collateral, or interest rates.

The draft law also adds a provision that in special cases, the SBV governor can decide on a maximum payment limit equal to all insured deposits. Under the current law, this authority belongs to the Prime Minister.

The change is aimed at promoting the role of the deposit insurance organisations in protecting the rights of depositors and ensuring system safety, Hồng said.

Presenting a report on the draft law, Chairman of the NA's Economic and Financial Committee Phan Văn Mãi asked the SBV to continue reviewing and perfecting the draft, ensuring its consistency with the Party's policies, constitutionality and the legal system.

Careful assessment of the resources and conditions needed to ensure the implementation of the amended law is also required, he said.

Mãi noted that it is crucial to specify the cases and conditions for deposit insurance organisations to receive support from the State budget, borrow from credit institutions or other organisations with Government guarantees, or take out special loans from the SBV.

As for the rights and obligations of the deposit insurance organisations, Mãi proposed clearly defining the calculation of deposit insurance premiums.

He suggested that the regulation of fee levels must be carefully studied, ensuring stable revenue sources and consistency with the financial capacity of participating organisations.

The SBV should research and determine a roadmap for setting fee levels based on the assessment and classification of credit institutions, he stated.

"Currently, the People's Credit Fund system must pay deposit insurance fees while still participating in the Safety Guarantee Fund for the People's Credit Fund System, so it is necessary to study a fee-sharing mechanism to reduce the financial burden for them," Mãi said.

The draft revised Law on Deposit Insurance is expected to be submitted to the NA for consideration and approval at a meeting next month. — BIZHUB/VNS