Vietnam proposes updates to deposit insurance law

It aims to strengthen the role of the Deposit Insurance of Vietnam.

The State Bank of Vietnam (SBV) has submitted a proposal to the government to amend the Law on Deposit Insurance, aiming to strengthen the role of the Deposit Insurance of Vietnam (DIV) and enhance depositor protection, reported Viet Nam News.

After 12 years of implementation, the SBV has identified challenges in the existing law and seeks revisions to improve the effectiveness of the deposit insurance policy and support the stability of the credit institution system.  

The proposal includes expanding investment options for the DIV by allowing it to purchase long-term bonds issued by credit institutions that receive compulsory transfers. 

Currently, the DIV can only invest its temporarily idle capital in government bonds, SBV bills, or deposits at the SBV. 

Whilst 99% of this idle capital is allocated to government bonds, declining bond yields have reduced the DIV’s investment returns, with profitability dropping from 9.41% in 2013 to 3.82% in 2023.  

The SBV also suggests granting the DIV authority to participate in setting deposit insurance payment limits for people's credit funds and other credit institutions. 

Additionally, the proposal includes regulations to manage investment risks, requiring the government to define criteria for investment portfolios, structures, and methods.