Vietnam: What is deposit Insurance? What are the procedures for premium payment of deposit insurances?
What is deposit Insurance in Vietnam?
Pursuant to the provisions of Clause 1, Article 4 of the Law on Deposit Insurance 2012, the specific concept of deposit insurance is as follows:
Deposit Insurance is a guarantee for repayment of deposits to the insured persons of deposit within the limit of premium payment when the deposit insurance participating organizations fall into the state of inability to repay deposits to the depositors or go bankrupt.
Thus, deposit Insurance is a guarantee for repayment of deposits to the insured persons of deposit within the limit of premium payment when the deposit insurance participating organizations fall into the state of inability to repay deposits to the depositors or go bankrupt.
- Insured persons of deposit is an individual having deposits insured at the deposit insurance participation organizations
- Deposit insurance participating organizations are foreign credit organizations and banking branches established and operating under the Law on credit organizations are entitled to receive deposits of individuals.
What are the current regulations on deposit insurance activities in Vietnam?
Insured deposits
According to the provisions of Article 18 of the Law on Deposit Insurance 2012, specific provisions on insured deposits are as follows:
Deposit insured is the deposit in Vietnam Dong of individuals deposited at the deposit insurance participating organization in the form of term deposit, non-term deposit, saving deposit, certificates of deposit, promissory notes, bills and other forms of deposit under the provisions of the Law on credit organizations, other than the deposits regulated in Article 19 of this Law.
Article 19 of the Law on Deposit Insurance 2012 stipulates uninsured deposits as follows:
- Money deposited at the credit organization of the individual who owns more than 5% of the charter capital of that credit organization.
- Money deposited at the credit organization of the individual who is a member of the member Board, member of Board of Directors, member of control Board, General Director (Director), Deputy General Director (Deputy Director) of that credit; Money deposited at the foreign banking branch of the individual who is the General Director (Director), Deputy General Director (Deputy Director) of that foreign banking branch.
- Money used to buy unknown valuable papers issued by the deposit insurance participating organization.
Deposit insurance fees
The regulations on deposit insurance fees are specified in Article 20 of the Law on Deposit Insurance 2012 as follows:
- The Prime Minister has regulated the fee framework of the deposit insurance at the request of the State Bank of Vietnam.
- Based on the fee framework of the deposit insurance, the State Bank of Vietnam shall regulate the specific fee rate ofthe deposit insurance for the deposit insurance participating organizations on the basis of assessment and classification of these organizations
- The deposit insurance fees are calculated on the basis of the average deposit balance of the insured deposit at the deposit insurance participating organizations.
- The deposit insurance fees are calculated and paid quarterly in the fiscal year. The deposit insurance participating organizations have to pay the deposit insurance fees to the deposit insurance organizations on the 20th date of the first month of the succeeding quarter at the latest.
- The deposit insurance fees are recorded into the operation expenses of the deposit insurance participating organizations.
Premium payment of deposit insurance
* Arising time of obligations of premium payment:
Article 22 of the Law on Deposit Insurance 2012 stipulates arising time of obligations of premium payment as follows:
The obligations of premium payment arising from the time the State Bank of Vietnam sends document to terminate the special control or document to terminate the application or documents not to apply the measures to restore the solvency for the credit organization that is an deposit insurance participating organization still falls into bankruptcy or the State Bank of Vietnam has document to identify the foreign banking branch that is a deposit insurance participating organization losing the ability to make payment of deposits to the depositors
* Term for premium payment:
Regarding the term for premium payment, Article 23 of the Law on Deposit Insurance 2012:
Within 60 days from the arising time of the obligation to pay the premium, the deposit insurance oganization is responsible for paying the premium to the insured depositors
* Limit of premium payment:
Pursuant to Article 24 of the Law on Deposit Insurance 2012, the limit of premium payment is as follows:
- The limit of premium payment is the maximal amount that the deposit insurance organization shall make payment for all insured deposits of a person at a deposit insurance participating organization upon the arising obligations of premium payment
- The Prime Minister stipulates the limit of premium payment at the request of the State Bank of Vietnam.
The maximum premium of the deposit insurance organization pays for all insured deposits in accordance with the Law on Deposit Insurance (including principal and interest) of a person at a deposit insurance participating institution when the obligations of premium payment arise, it is 125,000,000 VND (one hundred and twenty five million VND).
* Treating the deposit exceeding the limit of premium payment:
Regarding how to handle the deposit exceeding the limit of premium payment, Article 27 of the Law on Deposit Insurance 2012 stipulates:
The deposit of the insured persons of deposits including the principal and interest exceeding the limit of premium payment shall be settled in the process of assets treating of the deposit insurance participating organization as prescribed by the law.
What are the procedures for premium payment of deposit insurances in Vietnam?
For regulations on procedures for premium payment of deposit insurances, Article 26 of the Law on Deposit Insurance 2012 provides as follows:
- Within 10 working days from the arising time of the premium payment obligation, the deposit insurance participating organization must send the dossier to request the payment of premium to the deposit insurance organization.
The dossier to request the payment of premium includes the written request of the premium payment, the list of insured persons of deposit, the deposit of each insured person and the premium to request the deposit insurance to make payment.
- Within 05 working days after receiving complete dossiers as prescribed in Clause 1 of this Article, the deposit insurance organization shall verify the documents and books to determine the amount to be paid.
- Within 10 working days after the end day of inspection specified in clause 2 of this Article, the deposit insurance organization must have a plan to pay a premium to the insured persons of deposit; publicly announce the location, time, mode of payment of premium on three consecutive issues of a central newspaper, a local newspaper where located the head office and the branches of the deposit insurance participating organization and on website of a Vietnamese newspaper; listing the list of insurance payees at the announced locations.
- Upon receipt of premium, the insured persons of deposit must produce the evidencing papers of the legal ownership with respect to the insured deposits at the deposit insurance participating organization.
- The deposit insurance organization shall directly make payment of premium to the insured persons of deposit or authorize another deposit insurance participating organization to make payment.
- After a period of 10 years from the date the deposit insurance organization has announced the first time the payment of premium, the unclaimed premium shall be established the state ownership and added to the operating capital of the deposit insurance organization. The person who has the ownership of the insured deposit shall not have the right to request the deposit insurance organization to return that premium.
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