Deposit Insurance of Vietnam is entitled to use its temporarily idle funds to purchase Government bonds

Circular No. 312/2016/TT-BTC of the Ministry of Finance of Vietnam stipulates that operation capital of Deposit Insurance of Vietnam consists of charter capital provided by the state budget, revenues from deposit insurance premiums, investment in idle funds and other legal sources of revenues according to the law, particularly as follows:

- Charter capital of VND 5 trillion provided by the state budget and other legal sources;

- When adjustment to charter capital is required, the Board of Directors of Deposit Insurance of Vietnam shall report to the Ministry of Finance who shall then proactively coordinate with the State Bank of Vietnam to make submission to the Prime Minister for consideration.

With regard to principles of capital use, Circular No. 312/2016/TT-BTC specifies that Deposit Insurance of Vietnam is entitled to use capital to serve its operation according to the law. Using capital of Deposit Insurance of Vietnam must ensure the safety and development of capital.

Deposit Insurance of Vietnam shall be responsible for monitoring all the existing capitals and assets, doing the bookkeeping in strict compliance with current financial regime and statistics, reflecting sufficiently, accurately and punctually changes in capital and assets during its operation, defining specific responsibilities of each department, individual for causing damage and loss of its capital, assets.

With respect to investment and procurement of fixed assets, Deposit Insurance of Vietnam shall comply with regulations of law applicable to single-member limited liability company of which 100% charter capital is held by the State. Deposit Insurance of Vietnam is entitled to procure and invest in fixed assets in the limitation that the remaining value of the fixed assets would not exceed 30% of the charter capital plus the value of development investment fund stated in the accounting records etc.

Deposit Insurance of Vietnam is entitled to use its temporarily idle funds to purchase Government bonds, treasury bills of State bank of Vietnam and make deposits at State Bank of Vietnam.  

Circular No. 312/2016/TT-BTC also specifies that the technical reserve funds shall be used for the purpose of paying insurance payout to depositors in accordance with the law on deposit insurance.

In case the technical reserve funds are not sufficient to pay insurance payout to depositors, Deposit Insurance of Vietnam may receive aids or borrow from credit institutions or other organizations guaranteed by the Government in accordance with the Law on deposit insurance and its guiding documents.

In a case where Deposit Insurance of Vietnam has to sell Government bonds and/or treasury bills of the State bank of Vietnam in order to pay insurance payout to depositors, the difference between the selling price and buying price (positive or negative) shall be included in the technical reserve fund etc.

Circular No. 312/2016/TT-BTC of the Ministry of Finance of Vietnam takes effect from January 10, 2017 and replaces Circular No. 41/2014/TT-BTC dated April 08, 2014 defining financial regime with respect to Deposit Insurance of Vietnam.

Source: Thoi bao Tai chinh Viet Nam Online

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