The Law on Deposit Insurance has been passed on 18th June 2012 by Vietnam’s National Assembly stipulating the deposit insuance activities, rights and obligations of insured persons of deposits, rights and obligations of the insured persons and state management of deposit insurance with an intention to protect the legitimate rights and interests of the depositors and insured persons of deposits, deposit insurance participation organizations and other individuals, organizations and other agencies related to the deposit insurance operations.
The deposit insurance is a mandatory insurance being the contribution to maintain the stability of the system of credit organizations and to ensure the safe and healthy development of the banking operation.
This law prescribes that foreign credit organizations and banking branches operating in Vietnam, except for policy banks, shall participate in the deposit insurance. The State Bank of Vietnam is responsible to carry out the state management on deposit insurance with co-ordination of the Ministries, minisetrial-level agencies and People’s Committees.
This law clearly provides that the deposit insurance participating organizations must pay the fee of deposit insurance and the deposit insurance organisations should pay the complete premium. The deposit insured shall be the deposit made by individuals with the deposit insurance participating organizations in the form of term deposit, non-term deposit, saving deposit, certificates of deposit, promissory notes, bills and other forms and the currency shall only be Vietnam Dong.
The following deposits shall not be considered as insured deposit:
- The amount deposited by an individual who owns more than 5% of the charter capital in the credit organization in the same organization
- The amount deposited by a member of the Board or Board of Directors or control Board or the General Director, Director, Deputy General Director, Deputy Director of the credit organization in the same organization
- The amount deposited by the General Director, Director, Deputy General Director, Deputy Director of the branch of a foreign bank in the same branch.
- The amount utilized to buy unknown valuable papers issued by the deposit insurance participating organization
Under this law, the State Bank of Vietnam shall regulate the specific rate of the deposit insurance. The fees, calculated on the basis of the average deposit balance of the insured deposit at the deposit insurance participating organizations, shall be payable quarterly (on or before the 20th of the first month of the succeeding quarter) in the fiscal year by the deposit insurance participating organizations to the deposit insurance organizations.
Failure to pay or late payment or inadequate payment shall be liable to penalty in the form of fines. The deposit insurance particiipating organization shall be required to pay, in addition to the outstanding fee, a fine of an amount equal to 0.05% of the total amount for each day of late payment. If there is a delay of payment by 30 days then the deposit insurance organization shall intimate the State Bank of Vietnam in writing and request them to deduct the accounts of the deposit insurance participating organizations with the Bank to pay the fees and fines. State Bank of Vietnam shall call upon and take a decision within 30 days of such request. If the deposit insurance organization defaults again, then the State Bank of Vietnam can be called upon to suspend (temporarily or permanantly) the deposit receiving operation of such deposit insurance participating organization.
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