Decision 1660/QD-TTg 2022 approve Strategy on deposit insurance development through 2025

DECISION

Approving the Strategy on deposit insurance development
through 2025, with orientations toward 2030^[1]

PRIME MINISTER

Pursuant to the June 19, 2015 Law on Organization of the Government; and the November 22, 2019 Law Amending and Supplementing a Number of Articles of the Law on Organization of the Government and the Law on Organization of Local Administration;

Pursuant to the June 16, 2010 Law on the State Bank of Vietnam;

Pursuant to the June 18, 2012 Law on Deposit Insurance;

Pursuant to June 16, 2010 Law on Credit Institutions; and the November 20, 2017 Law Amending and Supplementing a Number of Articles of the Law on Credit Institutions;

Pursuant to the November 26, 2014 Law on Management and Use of State Capital Invested in Production and Business at Enterprises;

Pursuant to the Government’s Decree No. 16/2017/ND-CP of February 17, 2017 defining the functions, tasks, powers and organizational structure of the State Bank of Vietnam;

Pursuant to the Prime Minister’s Decision No. 986/QD-TTg of August 8, 2018 approving the Strategy for development of Vietnam’s banking sector through 2025, with orientations toward 2030;

At the proposal of the State Bank of Vietnam Governor in Report No. 136/TTr-NHNN of December 5, 2022.

DECIDES:

 Article 1. To approve under this Decision the Strategy on deposit insurance development through 2025 with orientations toward 2030 (below referred to as the Strategy) with the following contents:

I. VIEWPOINTS AND OBJECTIVES

1. Viewpoints

- The development of deposit insurers contributes to stabilizing Vietnam’s financial and banking system and promoting the national socio-economic development.

- To pursue the deposit insurance system’s consistent objective of protecting lawful rights and interests of depositors, thus contributing to maintaining the stability of the system of credit institutions and foreign bank branches and ensuring safe and sound development of banking operations;

- To enhance the role of deposit insurers in the course of restructuring weak insured institutions in association with the resolution of non-performing loans;

- To intensify studying and applying international standards to deposit insurance activities and business operations relating to insured institutions.

- To consider the application of cutting-edge science and technology and innovation coupled with the development of high-quality human resources as key to the fast and sustainable development of deposit insurers.

2. Objectives

a/ General objectives

- To protect lawful rights and interests of depositors, thus actively contributing to maintaining the stability of the system of credit institutions and foreign bank branches and ensuring safe and sound development of banking operations.

- To improve the quality and efficiency of deposit insurance activities, including deposit insurance participation certificates; provision of information and reporting on, supervision, inspection and participation in the special control, detection and early warning of, potential risks to insured institutions; to participate in efficient restructuring of weak insured institutions; to calculate and collect deposit insurance premiums, manage capital sources and investment, disseminate deposit insurance policy, and make deposit insurance payouts in line with international practices and Vietnam’s law.

- To raise the financial capacity of deposit insurers in order to affirm the State’s commitments and consolidate confidence of depositors in the deposit insurance policy.

b/ Specific targets

- To strive that the rate of fully insured depositors will make up 92% -95% of total insured depositors in accordance with international practices.

- To shorten the actual payment period upon arising of an obligation to make insurance payouts to 30 working days by 2025 and 15 working days by 2030 so as to help depositors early access their deposits when insured institutions are handled.

- To strive for the targets that the percentage of depositors that can grasp principal contents of the deposit insurance policy will reach 45% by 2025 and 55% by 2030.

II. MAJOR TASKS AND SOLUTIONS AND IMPLEMENTATION ROADMAP

1. Improving the legal framework

- To amend and supplement the Law on Deposit Insurance and the system of documents guiding the implementation of the Law on Deposit Insurance and the Law on Credit Institutions.

- To improve regulations on the financial regime applicable to deposit insurers.

2. Improving the deposit insurance policy

- To regularly review and assess the degree of conformity and propose adjustment of the insurance payment limit so that fully insured depositors will make up 92%-95% of total insured depositors in accordance with international practices.

- To study and evaluate Vietnam’s practical conditions and propose appropriate time for setting and applying deposit insurance premiums based on the evaluation and classification of insured institutions.

3. Deposit insurance operations

a/ Improving the legal framework and the process of issuance, revocation and management of deposit insurance participation certificates

In the 2022-2025 period:

- To complete the information technology-based process of issuing deposit insurance certificates so as to improve the effectiveness of the issuance of deposit insurance certificates and guarantee interests of insured institutions;

- To propose the modification and supplementation of regulations of posting up deposit insurance participation certificates to suit reality.

b/ Provision of information and reporting

- To regularly review, evaluate the operation of, and complete, the system of information and reporting to ensure adequate and reliable information.

- To improve the effectiveness of coordination and provision of information between deposit insurers and the State Bank of Vietnam and related agencies.

- To build adequate and synchronous information and data systems in order to ensure adequate and reliable information sources, including (i) the system of information and data transmitted from the State Bank of Vietnam; and (ii) the system of databases on insured deposits.

- To ensure effectiveness of exploitation and make adjustments suitable to practical operation of deposit insurers, thereby ensuring that the systems operate uninterruptedly and provide adequate information on insured institutions, including information from the State Bank of Vietnam, information on insured deposits, all dossiers on insured institutions since their participation in deposit insurance and the whole process of supervising operation of such institutions.

- To regularly evaluate the actual status of insured institutions in order to forecast the possibility of making insurance payouts and work out plans to develop revenue sources of deposit insurers in case insured institutions fall into the state of insolvency or bankruptcy.

c/ Improving the effectiveness of inspection, supervision and early warning

- In the 2022-2025 period:

+ To study and propose amendments and supplementations to the Law on Deposit Insurance’s provisions on rights and obligations of deposit insurers in assisting the State Bank of Vietnam in performing its functions of inspection and supervision of people’s credit funds;

+ To carry out in-depth investigation of insured deposits at all weak insured institutions based on results of the supervision by deposit insurers.

+ In the 2025-2030 period:

+ To improve risk-monitoring methods and the set of monitoring criteria, attaching importance to the detection and early warning of potential risks for insured institutions so as to match the market development and meet the State Bank of Vietnam’s requirements in each period.

+ To apply advanced monitoring models in order to ensure insured institutions’ compliance with regulations on insured deposits, detect and give early warning of potential risks for insured institutions to promptly protect rights and interests of depositors.

d/ Calculating and collecting deposit insurance premiums

In the 2022-2025 period:

- To increase the efficiency and intensify the application of information technology in the calculation and collection of deposit insurance premiums so as to ensure revenues from deposit insurance premiums.

- To study and propose amendments and supplementations to the Law on Deposit Insurance’s provisions on responsibilities of insured institutions for calculating and paying deposit insurance premiums.

dd/ Participating in special control and handling of insured institutions

- To participate and closely coordinate with the State Bank of Vietnam in the special control of weak insured institutions in order to secure interests of depositors; to perform the functions and tasks provided in the Law Amending and Supplementing a Number of Articles of the Law on Credit Institutions.

- In the 2022-2025 period: To formulate a scheme on application of additional methods and forms of handling of weak insured institutions in conformity with international practices and Vietnam’s practical conditions.

e/ Raising the effectiveness in making of deposit insurance payouts and asset liquidation

- To study and propose amendments and supplementations to the Law on Deposit Insurance so as to (i) put an end to the situation of deposit insurance profiteering and raise the coordination responsibility of deposit insurers and related agencies; (ii) create a legal framework for deposit insurers to participate in the liquidation of assets of insured institutions in order to optimize the recovered value.

- To formulate contingency plans and rehearse the making of payouts for each type of insured institutions.

- To compile a manual for making payouts for each type of insured institutions in order to standardize the process of making payouts, diversify payment forms and apply information technology to the process of making payouts so as to shorten the actual time for making payouts.

g/ Disseminating the deposit insurance policy

- To disseminate the deposit insurance policy, focusing on target subjects in each period as appropriate to practical conditions.

- To raise the effectiveness and diversify the forms of dissemination of the deposit insurance policy.

- To study and propose amending the Law on Deposit Insurance, adding a provisions requiring insured institutions to coordinate with deposit insurers in disseminating the deposit insurance policy.

- To survey the awareness of depositors about the deposit insurance policy once every three years.

- To formulate a general and long-term communication scheme in line with the Strategy.

h/ Other deposit insurance-related issues

In the 2022-2025 period:

-  To study and propose the signing of transnational deposit insurance cooperation agreements within the framework of cooperation between the central banks or  competent authorities of countries in order to guarantee interests of depositors at Vietnam-based foreign bank branches and overseas branches of Vietnamese banks;

- To study and propose mechanisms on legal defense for organizations and individuals working for deposit insurers during the performance of their assigned tasks.

4. Regarding deposit insurers

a/ Improving the financial capacity of deposit insurers

- In the 2022-2025 period:

- To study and propose amendments and supplements to relevant regulations in order to ensure sufficient legal grounds for:

+ Increasing charter capital of deposit insurers from self-accumulated sources and other lawful sources to VND 10 trillion by 2025 and VND 15 trillion by 2030 so as to secure their financial capacity, thereby affirming the State’s commitments and raising depositors’ confidence in the deposit insurance policy and ensuring resources for the effective implementation of deposit insurance operations.

+ To strengthen the financial capacity by allowing deposit insurers to diversify investment forms and portfolios, including (i) buying and selling government-guaranteed bonds; (ii) making deposits at efficiently operating commercial banks; (iii) buying and selling bonds, promissory notes, bills and deposit certificates issued by efficiently operating commercial banks; (iv) buying and selling high credit-rated municipal bonds in accordance with the Law on the State Budget of Vietnam, the Law on Management of Public Debts and guiding documents.

+ To add the form of borrowing loans from the State Bank of Vietnam in case a deposit insurer’s capital source is insufficient to make insurance payouts.

+ To formulate a scheme to access support funding sources in case a deposit insurer’s capital source is temporarily insufficient to make insurance payouts.

b/ Organizational apparatus and human resource development

- To regularly review and complete governance and administration documents and mechanisms.

- To renovate the personnel work regarding employee recruitment, evaluation, planning, appointment and commendation so as to build a contingent of highly qualified professional and loyal employees.

- In the 2022-2025 period:

+ To complete models of streamlined and highly qualified apparatus with synchronous governance and administration at head offices and branches.

+ To formulate a Scheme to develop human resources in line with the Strategy.

c/ Training work

- To prioritize the intensive training for  core professional teams and capable leaders.

- To promote the development of internal and e-learning training forms.

- To intensify the coordination between the State Bank of Vietnam and other training institutions so as to take advantage of such institutions’ available strengths such as expertise, physical facilities and training management experiences in order to raise training quality at deposit insurers.

- To renovate and modernize the training management with the application of technologies to identify training demands, manage data, and make analyses and evaluations before formulating training plans.

d/ Financial management, internal control and audit

- To regularly review and improve the internal control and audit system so as to ensure transparency, strictness and thrift.

- In the 2022-2025 period: To propose a plan to improve the financial regime to secure financial sources for the performance of the task of effectively participating in restructuring of weak insured institutions while prioritizing the use of financial sources for payment of insured deposits to depositors upon arising of an obligation to make insurance payouts.

dd/ Application of information technology and development cooperation

- To further step up the renovation and application of cutting-edge technologies by using information technology in governance and administration processes of deposit insurers at their head offices and branches so as to catch up with the development of cutting-edge technologies and that of the banking sector; to complete the mechanism for management of the information technology system, and enhance the system security and safety.

- To attach importance to applied research, encourage innovative initiatives to renovate and raise the operational efficiency of the organizations. To cooperate with domestic universities and research institutions in research.

- To expand international cooperation with the International Association of Deposit Insurers, bilateral and multilateral cooperation with deposit insurers of foreign countries so as to improve the effectiveness of external relations in the field of deposit insurance.

- To proactively and effectively implement technical and financial support projects within the State Bank of Vietnam’s project framework.

- In the 2022-2025 period: To formulate an information technology development scheme in line with the Strategy.

Article 2. Responsibility for organizing the implementation of the Strategy

1. The State Bank of Vietnam

The State Bank of Vietnam shall assume the prime responsibility for, and coordinate with related ministries, sectors and agencies in:

a/ Guiding, inspecting, supervising and evaluating the implementation of the Strategy; making preliminary review in 2025 and final review in 2030 in order to draw experiences from the performance of tasks and the implementation of solutions and objectives stated in the Strategy in each period.

b/ Making and sending annual reports on results of the performance and implementation of tasks, solutions and objectives stated in the Strategy in each period to the Prime Minister; submitting to the Prime Minister for decision and approval modifications to the Strategy’s objectives and contents in case of necessity.

c/ Proposing the Government to submit to the National Assembly amendments and supplements to the Law on Deposit Insurance.

2. The Deposit Insurance of Vietnam shall:

a/ Focus on and proactively organize the performance and implementation of tasks and solutions in order to achieve the objectives and implement the roadmaps stated in the Strategy in line with the Strategy on development of Vietnam’s banking sector and in accordance with law.

b/ To formulate a program of action to implement the Strategy’s contents in each period so as to achieve the objectives and orientations set in roadmaps stated in the Strategy.

c/ To make annual reports on results of the performance and implementation of tasks, solutions and objectives stated in the Strategy in each period to the State Bank of Vietnam.

d/ To report to the State Bank of Vietnam the results of 2025 preliminary review and the 2030 final review so as to draw experiences for the performance and implementation of the tasks, solutions and objectives stated in the Strategy in each period.

dd/ To review and propose the State Bank of Vietnam to report amendments and supplements to the Law on Deposit Insurance to the Government for submission to the National Assembly.

e/ To review and propose, and coordinate with competent agencies in revising, mechanisms and policies on the financial regime.

g/ To advise and propose the State Bank of Vietnam to submit to the Prime Minister for decision adjustments to the Strategy’s objectives and contents in case of necessity.

3. Related ministries and sectors shall coordinate with the State Bank of Vietnam in facilitating the implementation of the Strategy.

4. People’s Committees at all levels shall, within the ambit of their tasks and powers, coordinate with state management agencies in facilitating the effective implementation of the deposit insurance policy in their localities.

5. Insured institutions shall implement the Strategy under the State Bank of Vietnam’s direction.

Article 3. This Decision takes effect on the date of its signing.

Article 4. The Governor of the State Bank of Vietnam, the Minister of Finance, chairpersons of provincial-level People’s Committees, the Chairperson of the Board of Directors and Director General of the Deposit Insurance of Vietnam, and chairpersons of the Boards of Directors, chairpersons of the Members’ Councils and Directors General of insured institutions shall implement this Decision.-

For the Prime Minister
Deputy Prime Minister
LE MINH KHAI