Deposit insurance should be part of bank restructuring: Deputy PM

The Law on Deposit Insurance should be amended to give the Deposit Insurance of Vietnam (DIV), a non-profit State financial organisation, more independence in managing risk at credit institutions.

Deputy Prime Minister Vuong Dinh Hue and many insiders expressed this view at a working session with the DIV in Hanoi on August 10.

By the end of May, the DIV monitored more than 3,000 trillion VND (134.5 billion USD) worth of deposits at 1,252 deposit services providers, including 92 commercial and cooperative banks, 1,156 people’s credit funds, and three micro-financial organisations, according to Chairman of the DIV board of directors Nguyen Quang Huy.

Deputy PM Vuong Dinh Hue speaking at the working session

Its total capital was at 30.68 trillion VND (1.37 billion USD), including 5 trillion VND (224.2 million USD) of charter capital. More than 99 percent of the idle capital was invested in Government bonds.

The DIV has so far compensated 1,793 people who saved money at 39 dissolved credit funds.

Deputy Finance Minister Tran Van Hieu said the DIV was initially tasked with dealing with bankrupted credit funds. Its total asset value now exceeds 30 trillion VND, so the DIV should take on more responsibilities.

Deputy PM Hue said the DIV is an important institution, but it hasn’t engaged in the restructuring of the banking and credit systems. At present, it is only able to pay compensation for small credit organisations that go bankrupt.

He told the DIV to clarify its role in bank restructuring and bad debt settlement in the development strategy.

Within the next two months, international organisations will submit an official consultation plan to the Vietnamese Government, in which they will suggest revisions to the Law on Deposit Insurance so that the DIV can actively take part in bank restructuring, he added.