What is Deposit Insurance?

Article 4 of the Deposit Insurance Law 2012 stipulates: Deposit insurance is the assurance of reimbursing deposits to depositors within the insurance payment limit when the institution participating in deposit insurance falls into a state of insolvency or bankruptcy. In this context:

A depositor is an individual whose deposits are insured at the institution participating in deposit insurance and has the following rights and obligations:

- To have their deposits insured at the institution participating in deposit insurance;- To receive full and timely payment of insurance;- To request the institution participating in deposit insurance and the deposit insurance organization to provide complete and accurate information and policies regarding deposit insurance;- To file complaints, denunciations, and lawsuits against agencies, organizations, and individuals related to deposit insurance;- To have the obligation to provide complete and truthful information about deposits as required by the institution participating in deposit insurance and the deposit insurance organization when implementing insurance payment procedures.

Institutions participating in deposit insurance are credit institutions and branches of foreign banks that accept personal deposits, including commercial banks, cooperative banks, people's credit funds, and branches of foreign banks established and operating under the provisions of the Law on Credit Institutions, and have the following rights and obligations:

- To submit an application for a Certificate of Participation in Deposit Insurance;- To be granted a Certificate of Participation in Deposit Insurance;- To pay deposit insurance premiums fully and on time;- To request the deposit insurance organization to pay insurance to depositors at the institution participating in deposit insurance when the insurance payment obligation arises;- To file complaints, denunciations, and lawsuits against agencies, organizations, and individuals related to deposit insurance;- To provide information about insured deposits to the deposit insurance organization periodically or upon request.

The Deposit Insurance Organization is a state financial institution established by the Prime Minister of the Government of Vietnam and defined by the Governor of the State Bank of Vietnam, and has the following rights and obligations:

- To develop a deposit insurance development strategy for the State Bank of Vietnam to submit to the Prime Minister of the Government of Vietnam for approval and implementation;- To propose to the competent state management agencies to issue, amend, supplement, replace, annul, abolish, or suspend the enforcement of legal documents related to deposit insurance activities;- To be subject to inspection, examination, and supervision by the State Bank of Vietnam and competent state agencies as prescribed by law;- To issue and revoke Certificates of Participation in Deposit Insurance;- To request institutions participating in deposit insurance to provide information about insured deposits;- To calculate and collect deposit insurance premiums from institutions participating in deposit insurance;- To manage, use, and preserve deposit insurance funds;- To pay insurance to depositors;- To monitor and inspect compliance with legal regulations on deposit insurance; to recommend that the State Bank of Vietnam address violations of deposit insurance legal regulations;- To compile, analyze, and process information about institutions participating in deposit insurance to detect and promptly recommend that the State Bank of Vietnam address violations of banking safety regulations and risks causing instability in the banking system;- To ensure the confidentiality of deposit data and documents related to deposit insurance of institutions participating in deposit insurance;- To receive support with repayment from the state budget as decided by the Prime Minister of the Government of Vietnam or to borrow from credit institutions and other organizations guaranteed by the Government of Vietnam in cases where the deposit insurance organization's funds are temporarily insufficient to pay insurance; to receive sponsorships from domestic and foreign organizations and individuals to enhance operational capacity;- To participate in the special control process for institutions participating in deposit insurance as prescribed by the State Bank of Vietnam; to participate in managing and liquidating the assets of institutions participating in deposit insurance as prescribed by the Government of Vietnam;- To organize propaganda on deposit insurance policies and laws; to organize training and professional development in deposit insurance, research, and application of science, technology, and management methods in line with the development requirements of the deposit insurance organization.

Institutions participating in deposit insurance must pay a deposit insurance fee to the deposit insurance organization to insure the deposits of depositors. This fee is calculated based on the average balance of insured deposits at the institution participating in deposit insurance. Institutions participating in deposit insurance may pay deposit insurance fees quarterly in the financial year, no later than the 20th day of the first month of the following quarter.

Not all types of deposits are insured, only: Individual deposits in Vietnamese dong at institutions participating in deposit insurance in the form of term deposits, demand deposits, savings deposits, deposit certificates, promissory notes, treasury bills, and other forms of deposits as prescribed by the Law on Credit Institutions.

The following are not covered by insurance:

- Deposits at credit institutions by individuals who own more than 5% of the charter capital of such credit institutions.- Deposits at credit institutions by individuals who are members of the Members' Council, members of the Board of Directors, members of the Supervisory Board, General Directors (Directors), Deputy General Directors (Deputy Directors) of such credit institutions; deposits at branches of foreign banks by individuals who are General Directors (Directors), Deputy General Directors (Deputy Directors) of such branches of foreign banks.- Purchases of bearer papers issued by institutions participating in deposit insurance.

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