One of the important amendments that attracts the attention of depositors is the activity of paying insurance.
Regarding the time of arising insurance payment obligations
In the submission to the draft Law on Deposit Insurance (amended), the State Bank of Vietnam (SBV) said that current regulations on the time of payment of insured deposits do not ensure timeliness, and there is no basis for the Deposit Insurance of Vietnam (VBSP) to make deposit payments earlier, as soon as a credit institution has an event that risks endangering the system. The organization of unemployment insurance can only make deposit payments after the credit institution has decided to go bankrupt, which will not ensure the role of the Vietnam Deposit Insurance Corporation in stabilizing the psychology of depositors, preventing the risk of breaking down, and best protecting the rights of depositors. On the other hand, the timing of the arising payment obligation is not consistent with the provisions of the Law on CIs and is not in accordance with reality, leading to limitations in the role of the Vietnam Deposit Insurance Corporation in paying depositors.
According to the draft Law on unemployment insurance (amended), the obligation to pay insurance arises from one of the following times:
(1) The TCTD bankruptcy plan is approved or the SBV has a document determining that the foreign bank branch is unable to pay the deposit to the depositors.
The proposal to supplement this regulation is to synchronize with the provisions of the Law on TCTDs
(2) The SBV has a document suspending the receipt of deposits of a specially controlled credit institution with accumulated losses greater than 100% of the value of charter capital and reserve funds according to the most recently audited financial statements.
This regulation is supplemented based on the following: According to the provisions of the Law on TCTD, the Vietnam Deposit Insurance Corporation can only pay the depositors after the TCTD bankruptcy plan is approved. However, in reality, approving a TCTD bankruptcy plan is often prolonged and very difficult to implement. Therefore, it is necessary to determine the time of payment obligations earlier, creating more favorable conditions for the Vietnam Deposit Insurance Corporation to pay the depositors.
The time of arising payment obligations under the Law for credit institutions is associated with 3 conditions that must be met at the same time: i) The credit institution must be placed under special control; II) The SBV has a document suspending deposit receipt; III) The credit institution has an accumulated loss greater than 100% of the value of charter capital and reserve funds according to the most recently audited financial report. Technically, if the TCTD meets all of the above 3 conditions at the same time, it will not be able to continue operating. Therefore, the payment by the Vietnam Deposit Insurance at this time is appropriate and necessary, ensuring the correct promotion of the core role of the Deposit Insurance organization, which is to protect depositors through payment work.
According to the SBV, the regulation on early payment in the draft Law on Unemployment Insurance (amended) helps depositors quickly access insured deposits, strengthens trust, thereby limiting the phenomenon of mass withdrawals. This is also a measure to quickly handle weak credit institutions when people's deposits have been paid according to regulations.
(3) To ensure system safety, social order and safety as prescribed in Clause 4, Article 162 of the Law on CIs, the SBV reports to the Government to decide on requiring a covered payment organization in case a specially controlled CIs lose or are at risk of losing the ability to pay according to the law on CIs.
This regulation is issued to handle cases of specially controlled credit institutions on a large scale. Accordingly, bankruptcy or suspension of deposit receipt of large-scale credit institutions has the risk of affecting system safety and social order and safety. This regulation is very necessary to create additional payment channels for the Vietnam Deposit Insurance Corporation when a large-scale credit institution encounters problems (restricting the use of special lending channels from the State Bank or the Vietnam Deposit Insurance Corporation).
Regarding the insurance payment limit
According to the draft Law on unemployment insurance (amended), the Governor of the State Bank stipulates the insurance payment limit for each period. When an insurance payment obligation arises, in special cases, the Governor of the State Bank of Vietnam decides to exceed the prescribed payment limit, up to the maximum of all insured deposits of the person depositing at an organization participating in unemployment insurance when an insurance payment obligation arises. The limit for paying unemployment insurance in case of implementing the TCTD bankruptcy plan is specially controlled and implemented according to the provisions of the Law on TCTDs.
Thus, in the draft Law on unemployment insurance (amended), the authority to regulate the limit of insurance payment for each period is delegated to the Governor of the State Bank instead of the Prime Minister according to the provisions of the current Law on unemployment insurance. This, according to experts, is in line with the policy of promoting decentralization and delegation of power of the Party and State; at the same time, in line with the authority, functions and tasks of the State Bank. This approach also ensures flexibility, reducing procedures in changing the insurance payment limit.
Many opinions also believe that it is necessary to regulate special cases that allow the Governor of the State Bank to decide on the maximum payment limit equal to all insured deposits of depositors. Because this is a crisis response tool, ensuring that the State can protect all legitimate rights of depositors when serious incidents occur, thereby preventing the risk of mass withdrawals and maintaining the stability of the financial - banking system.
On the other hand, the current unemployment insurance payment limit is regulated from 2017. Up to now, this limit has revealed many shortcomings. Adjusting the increase in the insurance payment limit is necessary, and it is recommended that the Vietnam Deposit Insurance Corporation consider submitting to the Governor to adjust the increase in the insurance payment limit after the Law on Deposit Insurance (amended) is passed to better protect the legitimate rights and interests of depositors.
