With an overwhelming majority of delegates in favor, the National Assembly passed the amended Deposit Insurance Law on the morning of December 10th.
Earlier, in the explanatory report and feedback on special loans, Governor of the State Bank of Vietnam, Nguyen Thi Hong, stated that some opinions suggested clarifying the “principle of capital preservation in investment activities” regarding the sale of securities before maturity and the withdrawal of deposits before maturity, to avoid complications during implementation.
Governor of the State Bank of Vietnam, Nguyen Thi Hong. Photo: Nhu Y
Regarding this issue, Ms. Hong explained that, based on the feedback from delegates, clause 1 of Article 38 in the draft law on special loans from the State Bank has been supplemented and clarified. It states that the amount in the operational reserve fund is insufficient to pay insurance when the deposit insurance organization has exhausted the funds in the operational reserve and still cannot fulfill its insurance payment obligations.
“The sale of securities before maturity and the withdrawal of deposits before maturity must ensure the principle of capital preservation in investment activities,” the Government emphasized.
Furthermore, the principle of capital preservation in the investment activities of the deposit insurance organization has also been stipulated in the draft law. Accordingly, the specifics of the capital preservation principle in the investment activities of the deposit insurance organization, as well as special loans from the State Bank to the deposit insurance organization, will be regulated in the financial regime of the deposit insurance organization and the guiding documents of the State Bank.
Tight Supervision of Credit Institutions for Early Intervention
Regarding special loans, there were suggestions to further review and ensure consistency with the Law on Credit Institutions, specifying the scale and scope of mass withdrawals in cases of early intervention and special control in subordinate legislation for the provision in point c, clause 1, Article 35. This is to ensure that special loans are granted to the correct entities and prevent policy exploitation.
On this matter, the Governor of the State Bank clarified that the provisions on cases where the deposit insurance organization provides special loans in the draft law are fundamentally consistent with those in the Law on Credit Institutions.
Delegates at the session. Photo: Nhu Y
Additionally, according to regulations, credit institutions can receive special loans from the deposit insurance organization when facing mass withdrawals, without requiring that the institution be under early intervention or special control.
To ensure strict compliance, the draft law clearly stipulates that the deposit insurance organization provides special loans to participating credit institutions when they are under early intervention and face mass withdrawals, or are under special control and face mass withdrawals.
Credit institutions under early intervention or special control will be subject to more stringent inspection and supervision than other credit institutions, according to Governor Nguyen Thi Hong.
Moreover, the determination of “mass withdrawal,” “early intervention,” and “special control” has been defined with specific criteria in the Law on Credit Institutions and its implementing documents.
The draft law also authorizes the Governor of the State Bank to regulate the provision of special loans by the deposit insurance organization to credit institutions.
The amended Deposit Insurance Law, passed by the National Assembly, will take effect from May 1, 2026.
Article 38: Special Loans from the State Bank of Vietnam
The deposit insurance organization is entitled to special loans with a 0% interest rate, without collateral, from the State Bank of Vietnam in cases specified in Article 21 (the time when the obligation to pay insurance arises) of this law and when the funds in the operational reserve are insufficient to pay insurance.
The insufficiency of funds in the operational reserve to pay insurance is determined when the deposit insurance organization has exhausted the funds in the operational reserve and still cannot fulfill its insurance payment obligations. The sale of securities before maturity and the withdrawal of deposits before maturity must ensure the principle of capital preservation in investment activities.
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