The NA Standing Committee on September 22 afternoon discussed the draft Law on Deposit Insurance (amended).

Regarding insurance payouts, according to Hong, the draft law clearly stipulates the moment when the obligation to pay deposit insurance arises, starting from one of the following points in time:

First, when the bankruptcy plan of a credit institution is approved or when the SBV issues a written confirmation that a foreign bank branch is unable to repay deposits.

Second, when the SBV issues a document suspending the deposit-taking activities of a credit institution under special control, in cases where the institution has accumulated losses exceeding 100 percent of its charter capital and reserve funds.

Third, payouts in special cases. This occurs when the SBV reports to the Government, which then decides to require the deposit insurance organization to make payouts if the specially controlled credit institution is insolvent or at risk of insolvency.

The point at which the payout obligation arises in this case is determined when the SBV issues a written notice to the deposit insurance organization regarding payouts in special cases.

According to SBV Governor Nguyen Thi Hong, under current regulations, when an incident occurs, such as a bank experiencing a mass withdrawal, multiple measures are needed to stabilize the system. And the central bank must provide special loans in large amounts to deal with the case.

The Governor cited the mass withdrawal incident at SCB Bank.

“At that time, although the deposit insurance fund had nearly VND100 trillion, it could not be used,” Nguyen Thi Hong stated. The reason was that the old law stipulated that the deposit insurance fund could only be used for payouts when a credit institution goes bankrupt. 

Therefore, the SBV Governor emphasized that amending this law would allow deposit insurance to be paid out to depositors earlier, without having to wait until a credit institution declares bankruptcy.

In case the deposit insurance organization has exhausted its funds and lacks sufficient funds to pay depositors, the draft law proposes that the deposit insurance organization may receive special loans from the SBV.

The draft also adds a provision that, in special cases, the SBV Governor can decide on a maximum payout limit equal to the total insured deposits of a depositor. Under current law, this authority belongs to the Prime Minister.

This aims to strengthen the role of the deposit insurance organization in protecting depositors’ rights and ensuring system safety. Early payouts can help maintain system stability, and depositors may receive the full amount of their deposits rather than being limited by the insured amount.

Hong Hanh