DECISION

APPROVAL OF DEPOSIT INSURANCE DEVELOPMENT STRATEGY BY 2025 WITH A VISION BY 2030

THE PRIME MINISTER OF VIETNAM

Pursuant to the Law on Government Organization dated June 19, 2015; the Law on Amendments to the Law on Government Organization and the Law on Local Government Organization dated November 22, 2019;

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

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

Pursuant to the Law on Credit Institutions dated June 16, 2010 and the Law dated November 20, 2017 on amendments to the Law on Credit Institutions;

Pursuant to the Law on management and use of state capital invested in manufacturing and business operations of enterprises dated November 26, 2014;

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Pursuant to the Prime Minister’s Decision No. 986/QD-TTg dated August 08, 2018 approving the Strategy for development of Vietnam’s banking sector by 2025 with a vision by 2030;

At the request of the Governor of the State Bank of Vietnam at the Document No. 136/TTr-NHNN dated December 05, 2022.

HEREBY DECIDES:

Article 1. The “Insurance deposit development strategy by 2025, with a vision by 2030” (hereinafter referred to as "Strategy”) is hereby given approval. This Strategy, inter alia, includes the following contents:

I. VIEWPOINT AND OBJECTIVES

1. Viewpoints

- The development of deposit insurers contributes to the stability of Vietnam’s financial and banking system, and promotes the socio-economic development of the country.

- Maintain the consistent objective of the deposit insurance system that is to protect legitimate rights and interests of depositors, thereby contributing to the stability of the system of credit institutions and foreign bank branches as well as ensuring the safe and healthy development of banking activities.

- Intensify the role of deposit insurers in restructuring underperforming organizations having deposit insurance (hereinafter referred to as “insured organizations”) associated with bad debt settlements.

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- Applying science, modern technology and innovation, and developing high quality human resources are key components in the rapid and sustainable development of deposit insurers.

2. Objectives

a) General objectives:

- Protect legitimate rights and interests of depositors, thereby making positive contribution to the stability of the system of credit institutions and foreign bank branches, and ensuring the safe and healthy development of banking activities.

- Improve quality and efficiency in deposit insurance operations, including certification of participation in deposit insurance, provision of information and reporting, supervision, inspection, participation in special control, detection and early warning of potential risks to insured organizations; engage in the restructuring of underperforming insured organizations which should be performed in an efficient manner; calculate and collect deposit insurance premiums, manage funding sources and investments, disseminate policies on deposit insurance and make deposit insurance payouts in conformity with international practices and regulations of the law of Vietnam.

- Increase financial capability of deposit insurers so as to assert the State commitments and enhance confidence of depositors in policies on deposit insurance.

b) Specific objectives:

- Strive to achieve the ratio of fully insured depositors to total insured depositors of 92% - 95% which is conformable with international practices.

- Strive to shorten the actual payment period commencing from the occurrence of the payment obligation to 30 business days by 2025 and to 15 business days by 2030, in order to help depositors have early access to their deposits when taking actions against insured organizations.

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II. PRIMARY TASKS AND SOLUTIONS, AND IMPLEMENTATION ROADMAP

1. Establish a complete legal framework

- Consider making amendments to the Law on Deposit Insurance and its guiding documents, and the Law on Credit Institutions.

- Revise regulations on financial policies of deposit insurers.

2. Revise policies on deposit insurance

- Periodically review and assess the suitability and propose appropriate adjustments to the coverage limit with the aim of achieving the ratio of fully insured depositors to total insured depositors of 92% - 95% which should be conformable with international practices.

- Consider assessing actual conditions of Vietnam and propose appropriate time for setting and collecting deposit insurance premiums on the basis of assessment and classification of insured organizations.

3. Deposit insurance operations

a) Establish complete legal framework and procedures for issuance, revocation and management of certificates of participation in deposit insurance

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- Establish complete procedures for issuance of certificates of participation in deposit insurance, ensuring the application of information technology so as to improve efficiency in issuance of certificates of participation in deposit insurance as well as protect rights and interests of insured organizations.

- Propose amendments to regulations on listing of certificates of participation in deposit insurance to meet actual demands.

b) Provision of information and reporting

- Frequently review and assess the operation of and upgrade the information and reporting system which is expected to provide adequate and reliable information.

- Increase efficiency in cooperation and sharing of information between insured organizations and the State Bank of Vietnam (SBV) and relevant agencies.

- Establish adequate and synchronous information and data systems that should provide adequate and reliable information, including: (i) System of information and data received from the SBV; (ii) Database on insured deposits.

- Ensure efficient operation and make adjustments, which should be appropriate to actual operations of deposit insurers, to such systems which are expected to operate thoroughly to provide adequate information about insured organizations, including information received from the SBV, insured deposits, profiles of insured organizations obtained when they participate in deposit insurance and the entire process of supervision of insured organizations.

- Frequently assess actual conditions of insured organizations in order to plan capacity for claims and revenues of insured organizations if they are insolvent or declared bankrupt.

c) Improve efficiency in inspection, supervision and early warning

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+ Consider proposing amendments to the Law on Deposit Insurance in respect of provisions on rights and obligations of deposit insurers to assist the SBV in inspecting and supervising people’s credit funds.

+ Conduct in-depth inspection of fully insured deposit accounts at underperforming insured organizations based on supervision results given by deposit insurers.

- In 2025 – 2030 period:

+ Improve risk management methods and supervision criteria, attaching special importance to detection and early warning of potential risks to insured organizations in order to meet the market development and requirements laid down by the SBV in each period.

+ Apply advanced supervision models to ensure the strict compliance by insured organizations with regulations of law on insured deposits, detect and give early warning of potential risks to insured organizations, thereby promptly protecting rights and interests of depositors.

d) Calculate and collect deposit insurance premiums

In 2022 – 2025 period:

- Improve efficiency and intensify application of information technology to calculation and collection of deposit insurance premiums in order to ensure revenues from deposit insurance premiums.

- Consider proposing amendments to the Law on Deposit Insurance in respect of responsibilities of insured organizations in calculating and paying deposit insurance premiums.

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- Participate in and cooperate with the SBV in putting underperforming insured organizations under special control in order to protect rights and interests of depositors. Perform functions and tasks defined in the Law on amendments to the Law on Credit Institutions.

- In 2022 - 2025 period: Develop the Scheme for implementation of additional measures and actions against underperforming insured organizations in conformity with international practices and actual conditions of Vietnam.

e) Improve efficiency in deposit insurance payout and asset liquidation

- Consider proposing amendments to the Law on Deposit Insurance in order to: (i) prevent deposit insurance frauds, and improve the cooperation between deposit insurers and relevant authorities; (ii) establish legal corridor for deposit insurers' liquidation of assets of insured organizations, thereby maximizing recovered values.

- Develop contingency plan and payout practices for each type of insured organizations.

- Develop payout manual for each type of insured organizations in order to standardize payout process, diversify payout methods, and apply information technology to payout process within the aim of shortening actual payout period.

g) Dissemination of policies on deposit insurance

- Organize dissemination of policies on deposit insurance, paying attention to target groups defined in each given period to meet actual demands.

- Improve efficiency and diversify dissemination forms of policies on deposit insurance.

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- Carry out surveys on depositors’ awareness about deposit insurance policies which should be then carried out every 3 years.

- Develop master and long-term communication schemes which should be conformable with this Strategy.

h) Other issues concerning deposit insurance

In 2022 – 2025 period:

- Consider proposing conclusion of cooperation agreements on transnational deposit insurance under the cooperation framework between central banks or competent authorities of countries in order to protect rights and interests of depositors at foreign bank branches in Vietnam as well as overseas branches of Vietnamese banks.

- Consider proposing legal protection mechanisms for deposit insurers and their employees during performance of assigned tasks.

4. Deposit insurers

a) Improvement of financial capability of deposit insurers

- In 2022 – 2025 period:

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+ Increasing the charter capital of deposit insurers to VND 10.000 billion by 2025 and to VND 15.000 billion by 2030 with their accumulated funds and other lawful funding sources with the aim of increasing their financial capability, asserting State commitments and enhancing confidence of depositors in policies on deposit insurance as well as ensuring resources for efficient performance of deposit insurance operations.

+ Increasing financial capability by means of permitting deposit insurers to diversify investment forms and investment portfolios, including: (i) Purchase and sale of Government-backed bonds; (ii) Making of deposits at highly efficient commercial banks; (iii) Purchase and sale of bonds, promissory notes, treasury bills and deposit certificates issued by highly efficient commercial banks; (iv) Purchase and sale of municipal bonds prescribed in the SBV’s regulations, the Law on public debt management and its guiding documents, and granted high credit rating.

+ Provide additional methods for getting loans from the SBV in case funding of a deposit insurer is not enough for making payouts.

- Develop the scheme for supporting deposit insurers that temporarily do not have enough funding for making payouts.

b) Organizational structure and human resources development

- Frequently review and revise documents and mechanisms on management and administration.

- Revise personnel policies in terms of recruitment, employee performance evaluation, planning, appointment, commendation and reward in order to develop professional and high quality personnel who are expected to remain with organizations.

- In 2022 – 2025 period:

+ Develop types of organizational structures that are lean and professional, and have efficient and synchronous management from the main office to branches of an organization.

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c) Training tasks

- Provide in-depth training for key employees and capable managers.

- Promote the internal training and e-learning forms.

- Intensify cooperation with the SBV and other training institutions in taking advantage of their existing professional knowledge, material facilities and training management experience for improving training quality of deposit insurers.

- Renovate and modernize training management activities by means of applying technologies to determination of training demands, data management, analysis and assessment when developing training programs.

d) Financial management, internal control and audit

- Frequently review and revise the internal control and audit system, ensuring transparency and cost saving.

- In 2022 – 2025 period: propose plans for revising financial policies to ensure financial sources for effectively engaging in restructuring of underperforming insured organizations while prioritizing the use of financial sources for making payment of insured deposits to depositors in case the payment obligation arises.

dd) Application of information technology and development cooperation

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- Pay attention to research and application, and encourage initiatives to improve their operational efficiency. Cooperate with domestic universities and research institutes to do research.

- Develop international cooperation with the International Association of Deposit Insurers, bilateral and multilateral cooperation with deposit insurers of foreign countries in order to improve effectiveness in foreign relations in the deposit insurance field.

- Proactively and efficiently implement projects providing technical and financial assistance under the framework of SBV’s projects.

- In the 2022 - 2025 period: Develop information technology development schemes which should be conformable with this Strategy.

Article 2. Responsibility to organize and implement this Strategy

1. Responsibilities of the State Bank of Vietnam (SBV)

SBV shall play the leading role and cooperate with relevant Ministries and regulatory authorities in:

a) Instructing, inspecting and supervising the assessment of the implementation of this Strategy; organizing the preliminary assessment in 2025 and final assessment in 2030 for learning experience of performing tasks, solutions and objectives of the Strategy in each period.

b) Submitting annual reports to the Prime Minister on performance of tasks, solutions and objectives of the Strategy in each period. Requesting the Prime Minister to decide or give approval for modification of objectives and contents of this Strategy where necessary.

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2. Responsibilities of the Deposit Insurance of Vietnam (DIV)

a) Proactively organize the synchronous performance of tasks and solutions for achieving the objectives and roadmap set out in this Strategy in conformity with the Strategy for development of Vietnam’s banking sector and regulations of law.

b) Formulate action programs for implementation of this Strategy in each period with the aim of achieving objectives and orientations according to the roadmap set out in this Strategy.

c) Submit annual reports to SBV on performance of tasks, solutions and objectives of the Strategy in each period.

d) Submit preliminary assessment report in 2025 and final assessment report in 2030 to SBV for learning experience of performing tasks, solutions and objectives of the Strategy in each period.

dd) Review and submit proposed amendments to the Law on Deposit Insurance to the SBV for submission to the Government and then the National Assembly.

e) Review, propose and cooperate with competent authorities in making amendments to regulations on financial policies.

g) Give advice and request the SBV to request the Prime Minister to decide modification of objectives and contents of this Strategy where necessary.

3. Responsibilities of relevant ministries and regulatory authorities

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4. Responsibilities of People's Committees of all levels

People's Committees of all levels shall, within the ambit of their assigned tasks and powers, cooperate with state regulatory authorities in facilitating the efficient implementation of policies on deposit insurance in their provinces.

5. Responsibilities of insured organizations

Insured organizations shall implement this Strategy according to the SBV’s guidelines.

Article 3. This Decision comes into force from the date on which it is signed.

Article 4. The SBV’s Governor, Minister of Finance of Vietnam, Chairpersons of People’s Committees of provinces and central-affiliated cities, Chairperson of Board of Directors and General Director of DIV, and Chairpersons of Boards of Directors, Chairpersons of Boards of Members, and General Directors of insured organizations are responsible for the implementation of this Decision.

PP. PRIME MINISTER
DEPUTY PRIME MINISTER




Le Minh Khai

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