Number of Inspections by Years (Attached Appendix)

2.2.2.3. Insurance payment

a. Obligation to pay insurance

The obligation to pay insurance premiums arises from the time the State Bank of Vietnam issues a document terminating the KSDB or a document terminating the application or not applying the measures to restore solvency while the credit institution being the deposit insurance institution is still in a state of bankruptcy or the State Bank of Vietnam issues a document determining that the foreign bank branch being the deposit insurance institution is unable to pay deposits to depositors.

b. Insurance payment period

Within 60 days from the date the obligation to pay insurance arises, the deposit insurance organization is responsible for paying insurance money to the insured person.

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c. Insurance payment limit, insurance amount paid

Article 24 of the Law on Deposit Insurance stipulates that “ The Prime Minister shall prescribe the limit for insurance payments at the request of the State Bank of Vietnam in each period ”. Thus, the law does not prescribe the limit in absolute numbers. If the limit for insurance payments is specifically prescribed in the Law on Deposit Insurance, the change will be very complicated; moreover, the new regulation will allow the limit to be flexibly adjusted in each period to suit socio-economic conditions as well as special situations such as crises....

From 2005 to the end of July 2017, the insurance payment limit was applied at 50 million VND as prescribed. At that time, this limit ensured full protection for about 85% of insured depositors. According to international practice, limited insurance limit and scope is a reliable standard, minimizing moral hazard, while not eroding market discipline. The deposit insurance payment limit must be consistent with factors such as average income, deposit structure, political environment, depositor confidence, and other macroeconomic indicators.

Over the past 12 years, the macroeconomic situation such as inflation, GDP per capita, exchange rates, and interest rates have changed a lot. The operations of the banking system and the situation of deposit balances and deposit structure have also changed significantly. Therefore, it is necessary to consider adjusting the deposit insurance payment limit.

On June 15, 2017, the Prime Minister signed and issued Decision No. 21/2017/QD-TTg on the limit of social insurance payment. On August 5, 2017, Decision 21/2017/QD-TTg had

The effective amount of payment for all insured deposits under the provisions of the Law on Deposit Insurance (including principal and interest) of an individual at a deposit insurance institution is a maximum of 75 million VND. Raising the deposit insurance payment limit is appropriate to meet the changing requirements of the current economy.

d. Insurance payment

In Vietnam, payment regulations are stipulated in the Law on Deposit Insurance and its implementing documents. Within 60 days from the time the obligation to pay insurance premiums arises, the deposit insurance organization is responsible for paying insurance premiums to the insured person.

Table 2.2.3: Number of QTDND and number of savings books paid by BHTGVN (from 2000 - 2016) (attached appendix ).

During the period 2000-2012, the Vietnam Deposit Insurance Corporation made great efforts to reduce the actual payment time to an average of 30-40 days, ensuring the rights of depositors. However, since its establishment, there has not been any case of commercial bank failure. The Vietnam Deposit Insurance Corporation has only paid promptly to small-scale credit institutions that have failed, except for one case of delayed payment due to the lack of consistency in legal basis and the need for guidance from competent authorities. According to the 2014, 2015 Annual Report and the 2016 summary report of the Vietnam Deposit Insurance Corporation, from 1999 to the end of 2016, the Vietnam Deposit Insurance Corporation has paid 26.78 billion VND to 1,826 depositors at the Vietnam Deposit Insurance Corporation, which were compulsory liquidated credit institutions in 12 provinces and cities nationwide.

In the three years 2014, 2015 and 2016, there was no need for DIV to pay insurance money to depositors at the deposit insurance institutions, but there were still a number of weak and bad QTDNDs with no possibility of recovery and the State Bank determined that they were likely to go bankrupt. The Vietnam Deposit Insurance has closely monitored the developments and activities of these QTDNDs, coordinated with the Banking Inspection and Supervision Agency - the State Bank and the State Bank branches in provinces and cities to grasp the situation and agree on measures to be ready to handle QTDNDs at risk of going bankrupt. The Vietnam Deposit Insurance proactively prepares payment plans when the obligation to pay insurance money arises.

With the approval of the Prime Minister, on March 11, 2014, the Board of Directors of BHTGVN issued a Decision to cancel debts for 27/29 QTDNDs dissolved before 2005 with

The total amount of unrecoverable insurance payments is 10 billion 220 million VND, the debt cancellation has been notified to relevant agencies. For the 02 QTDND Song Phuong and Le Loi in Hanoi, there has not been a decision to terminate the operation of the Liquidation Council, so the debt cancellation has not been implemented according to regulations.

BHTGVN continues to monitor the liquidation process of 05 QTDNDs under liquidation monitoring to recover paid insurance money, the total amount refunded to BHTGVN in 2014 is 60 million VND (of which 40 million VND was recovered from QTDND Tru Huu and 20 million VND from Vinh Phong). BHTGVN has urged the collection of support loan debt for QTDND Phuong Tu, which is 200 million VND, increasing the accumulated collection to 770 million VND, the remaining debt is 230 million VND (out of the total support loan amount of 1 billion VND). In 2015, BHTGVN has urged the collection of all outstanding loan debt of QTD Phuong Tu, which is 230 million VND (the total amount recovered is 1 billion VND, equal to 100% of the loan amount).

Previously, the Vietnam Deposit Insurance paid directly to depositors, but then signed a contract with the Vietnam Development Investment Bank to speed up the payment process through the branch system. The Vietnam Deposit Insurance has the human resources to complete the payment procedures. If the information management system is renewed, the calculation time will be shortened, and the payment will be made promptly. Although the amount paid to depositors is not large, it contributes to preventing the spread of the disease, preventing complaints, ensuring social security and not using the State budget. The above efforts of the Vietnam Deposit Insurance in the past have made an important contribution to protecting the legitimate rights and interests of depositors, enhancing public confidence in the financial-banking system, ensuring the safety of the credit institution system, and sustainable development of the socio-economy.

e. Limitations and recommendations in insurance payment

Payouts are not the only option, but when they are chosen to resolve a failure, the deposit insurance system must respond quickly, as recommended by IADI, and in a way that is meaningful to depositors. Public funding and provisioning mechanisms will help the deposit insurance organization have sufficient capacity to pay. In Vietnam, current laws have regulated issues related to payouts, and Vietnam basically complies with the recommendations on actual payout times, payment authorizations, and access to reserve funds as prescribed.

Although the amount paid to depositors by some QTDNDs so far is not large, it has contributed to preventing collapse and not using the State budget.

There is still a gap between practice and regulations in terms of: information sharing and coordination of handling between related parties; the capacity of the deposit insurance fund is not large enough to meet the payment of many failures at the same time; payment experience is limited to small-scale QTDND and there are no clear regulations on the responsibilities of related parties, sanctions for handling violations and violations in providing - accessing - cooperating in sharing information on bank handling. It is necessary to continue to research and seriously consider to reform the insurance payment system in the direction of: ( 1).Shorten the payment period to less than 60 days, differentiate the time frame for each type of organization according to trends, international best practices, and depositor needs; ( 2).Apply temporary payment policy if failure prolongs overdue payment period; ( 3).Consider the opportunity and timely access of depositors to deposits in the event of a failure to ensure confidence and psychological well-being; ( 4).Plan to build a system to manage information on deposits and depositors (applying information technology, referring to best international practices, experiences and models).

2.2.2.4. Risk monitoring and control

a. Status of implementation of testing tools

Through inspection, BHTGVN discovered many weak QTDNDs that violated the provisions of the law on BHTG and safety in banking operations.

In order to contribute to protecting the legitimate rights and interests of depositors, BHDTVN has focused on inspecting the accounting and management of insured deposit accounts, records, documents, and vouchers related to insured deposits at weak credit institutions and discovered many violations at a number of credit institutions, specifically:

+ Missing elements, contents, and information of the depositor on the savings deposit card, deposit and withdrawal slips according to regulations (ID number,

Date of issue, place of issue); Wrongly recorded customer's last name;

+ Missing signatures of Director, accountant, controller, cashier, depositor

on the savings deposit card and some accounting documents; The customer's signature on the savings deposit card and on the accounting documents are inconsistent;

+ Some savings cards do not calculate interest and add principal in a timely manner;

+ The date on the deposit card and the cash book do not match; The deposit term is recorded incorrectly on the statement; Interest is not calculated according to the term recorded on the deposit card; The term in the statement is wrong compared to the term on the savings deposit card; The serial number of the deposit card does not match the deposit statement...

+ The deposit balance on the accounting account balance is different from the customer's detailed deposit statement;

+ The registration book for the signatures of the Director and the staff performing the work has not been opened, causing difficulties for the Inspection Team, as they do not have a legal basis to accurately compare the signatures, but only compare the signatures between the storage cards with the signatures on the accounting documents and books relatively; The fund book has not been opened in accordance with regulations, the management and recording of the cash fund book is not strict (lack of seals between the pages of the book, the cover pages of the fund books do not fully record the information according to regulations: page number, volume number, start date, end date, confirmation, signature and seal of the Director).

+ The opening of books, monitoring and management of blank seals are still not strict, not reflecting the data of import, export and inventory. Some QTDNDs have lost blank savings deposit books.

It can be said that, from the above results, the role of inspection activities has been promoted, demonstrated in the following aspects:

- Inspection activities have detected and recommended measures to handle violations of the law on social insurance.

- Through the inspection work, BHTGVN has discovered cases of violations of legal regulations on BHTG, as well as violations of regulations on safety in banking activities. Especially for QTDNDs, it has assessed the current situation of QTDNDs' operations more comprehensively. In addition to checking compliance with the law, it has initially assessed the level of credit risk and

operational risks, detecting high-risk QTDNDs for warning.

- Through inspection activities have contributed to the implementation of the government's goals.

The policy of deposit insurance is to protect the legitimate rights and interests of depositors. Especially for the QTDNDs classified at level 4 and level 5, the inspection content focuses on insured deposits, thereby promptly detecting violations to warn the depositors.

QTDND, propose remedial and rectification measures; protect the legitimate rights of depositors; limit acts of profiteering from deposit insurance.

- The inspection activities have contributed to building the image and enhancing the reputation of BHTGVN among BHTG organizations. Based on the violations discovered through the inspection, the inspection teams of BHTGVN have determined the causes and made appropriate warnings and recommendations to help the inspected units take timely remedial measures, contributing to helping BHTG organizations operate more stably and effectively.

- The test results are useful input information for other business activities as well as for research and improvement of social insurance policies such as building a differentiated social insurance premium system, determining the optimal social insurance payment limit, determining the target social insurance fund ratio... for implementation in the coming time.

Table 2.2.4: Number of inspections by year (attached appendix)

- The inspection work has actively contributed to helping the deposit insurance organizations understand correctly and strictly comply with the law on deposit insurance, contributing to raising the awareness of these organizations about the deposit insurance policy, their self-consciousness in complying with the provisions of the law on deposit insurance, thereby contributing to improving the effectiveness and efficiency of the deposit insurance policy, strengthening the socialist legal system, helping the units to rectify their management and operation as well as compliance with the law.

- Propagating and promoting the State's policy on BHTGVN, strengthening the relationship between BHTGVN and BHTG organizations. BHTG organizations have clearly changed their perception and understanding of the functions, tasks, positions, roles and activities of BHTGVN, contributing to ensuring safety in the system of BHTG organizations.

On-site inspections are always of interest to BHTGVN. In 2016, inspections were completed for 463 BHTG organizations, including 42 commercial banks, 419 people's credit funds and 02 microfinance organizations, achieving 100% of the 2016 inspection plan.

b. Implementation status of risk monitoring tools

Risk monitoring is the collection, analysis and processing of information on the deposit insurance system to detect and recommend the State Bank to promptly handle violations of regulations on safety of banking operations and risks causing insecurity in the banking system. Law on Deposit Insurance

was established to create a solid legal foundation for the Deposit Insurance Organization to better perform its function of protecting depositors and contributing to ensuring the safety and soundness of banking operations. On that basis, the Deposit Insurance of Vietnam has actively implemented activities to monitor and provide early warning of potential risks of Deposit Insurance Organizations.

Through the monitoring reports, the Vietnam Deposit Insurance has detected many cases of credit institutions violating regulations on safety in banking operations, potentially causing risks that could cause insecurity in the banking system. The Vietnam Deposit Insurance also regularly sends reports to the State Bank and recommends that the State Bank handle violations when they are detected. In addition, the Vietnam Deposit Insurance has prepared ad hoc reports to the State Bank on the operations of organizations that have encountered unusual incidents that are at risk of insolvency, loss of assets, and potentially have a negative impact on the banking system. It can be said that the monitoring work of the Vietnam Deposit Insurance contributes to supporting credit institutions to detect

Risks in operations, timely handling, minimizing possible damage.

With the hope that through monitoring activities, in the coming time, the Vietnam Deposit Insurance will promptly detect weak credit institutions with potential risks. The State Bank and the Vietnam Deposit Insurance have actively coordinated and shared information to resolve the remaining limitations and support the Vietnam Deposit Insurance to better perform its monitoring function, further improving the quality of monitoring reports. Accordingly, the State Bank and the Vietnam Deposit Insurance have focused on resolving the first two issues, the State Bank is implementing a project to modernize banking information technology, in which a relatively large component is allocated to the Vietnam Deposit Insurance. So far, the project has basically been completed. Second, regarding the issue of limited input information, the State Bank has directed the Banking Inspection and Supervision Agency (SBV) to coordinate with the Vietnam Deposit Insurance to draft a Circular on information sharing between the State Bank and the Vietnam Deposit Insurance.

BHTGVN conducts monthly, quarterly and annual periodic supervision of 100% of BHTG depository institutions. Through the results of information reports received from BHTG depository institutions, the State Bank of Vietnam and other sources of information, BHTGVN has analyzed and evaluated the performance of BHTG depository institutions; detected weaknesses and violations of safety regulations in banking operations to report and recommend the State Bank of Vietnam to consider and handle promptly.

2.2.2.5. Investment activities

In 2010, the total amount of temporarily idle capital invested by BHTGVN was 6,599 billion VND, an increase of 34.56% compared to the same period last year. The total interest earned from capital investment activities reached 670 billion VND, an increase of 81% compared to the total interest earned in 2009. In 2011, the total amount of temporarily idle capital invested by BHTGVN in buying bonds and depositing at state-owned commercial banks was 8,914 billion VND, with a total interest earned of 869 billion VND.

Table 2.2.5: Total temporarily idle capital invested by year

*Source: Annual report of BHTGVN

In 2012, the total temporarily idle capital of BHTGVN invested in buying bonds and deposited at state-owned commercial banks was 11,971 billion VND, with the interest earned about

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