Deposits of Vietnam Deposit Insurance

Deposits of Vietnam Deposit Insurance (Internet image)

Regarding this issue, LawNet would like to answer as follows:

1. What is Deposit Insurance of Vietnam?

According to Clause 1, Article 2 of Circular 312/2016/TT-BTC, Deposit Insurance of Vietnam is a financial institution that is operating in the form of a single-member limited liability company of which 100% charter capital is held by the State, having a legal status, a seal, and an account under Vietnamese law, operating on a not-for-profit basis, and ensuring capital adequacy and self-financed expenses.   

2. Deposits of Vietnam Deposit Insurance

Specifically, in Clause 1, Article 18 of Circular 312/2016/TT-BTC, the receipts of Deposit Insurance of Vietnam consist of:

- Receipts from financial activities:  is an amount deducted from the revenue earned from annual investment of idle funds in accordance with Clause 2 Article 6 hereof.

- Receipts from deposit insurance services:

+ Receipts from fines imposed on insured institutions that violate regulations on the amount and time limit for payment of premiums according to the provisions of law;

+ Receipts from other deposit insurance services.

- Receipts from other activities:

+ Receipts from liquidation, sale and assignment of fixed assets;

+ Receipts from lease of fixed assets;

+ Receipts from consultancy services and training for officers of insured institutions;

+ Other receipts.

3. Rules for accounting of receipts in Vietnam

Amounts receivable of Deposit Insurance of Vietnam must be determined in accordance with accounting standards and relevant law provisions with eligible documentary evidence and be included in revenues.

With regard to amounts receivable from financial activities:

- At the end of month or quarter, Deposit Insurance of Vietnam shall rely on a rate permissible to be deducted from the receipts from annual investment of idle capital to cover operational expenses according to the regulations set out in Clause 2 Article 6 of Circular 312/2016/TT-BTC and the receipts earned from the investment of idle capital in such a month, quarter shall be temporarily deducted for entering in the accounts as earnings (equal to the multiplication of the rate by the receipts from the investment of idle capital); the remaining receipts from the investment of idle capital shall be entered in the technical reserve funds. 

In case such a deductible rate used to cover operational expenses is yet to be approved by the Ministry of Finance, Deposit Insurance of Vietnam shall temporarily enter into the accounts as earnings with a rate equal to 80% of the preceding year’s deductible rate.

- At the end of year, based on the year’s receipts from investment of idle capital, Deposit Insurance of Vietnam shall be responsible for entering accurately the receipts in the accounts as earnings and the receipts after being partly deducted to cover the expenses according to the regulations set out in Clause 2 Article 6 of Circular 312/2016/TT-BTC shall be supplemented to the technical reserve funds;

- After State Audit of Vietnam’s annual finance audit report or the competent agencies’ conclusions on financial receipts and expenditures of Deposit Insurance of Vietnam are available, in the event the receipts from the investment of idle capital change, Deposit Insurance of Vietnam shall be responsible for adjusting allocation of the receipts to earnings and the receipts after being partly deducted to cover the operational expenses according to the regulations set out in Clause 2 Article 6 of Circular 312/2016/TT-BTC to be supplemented to the technical reserve funds.

(Clause 2, Article 18 of Circular 312/2016/TT-BTC)

Thanh Rin

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