Number of Organizations Participating in Insurance in the Period 2000-2010

ORGANIZATIONAL STRUCTURE OF THE DEPOSIT INSURANCE ORGANIZATION IN VIETNAM

Diagram 2.2 Organizational structure of BHTGVN

Source: www.div.gov.vn

- Regulations on organizations participating in deposit insurance: According to Article 2, Decree No. 89; Clause 1, Article 1 of Decree No. 109 and Point a, Clause 1, Section I, Circular No. 03/2006 stipulate that credit institutions and organizations that are not credit institutions are allowed to perform certain banking activities according to the provisions of the Law on Credit Institutions that receive deposits from organizations and individuals must participate in compulsory deposit insurance (these organizations are called organizations participating in deposit insurance).

Organizations participating in BHTG must publicly post the BHTG Certificate.

at headquarters and transaction points.

Currently, organizations participating in social insurance include the following types:

- State commercial bank;

- Joint stock commercial bank;

- Joint venture bank;

- Foreign bank branches;

- Finance companies, financial leasing companies;

- Central People's Credit Fund;

- Grassroots credit funds.

Number of organizations participating in BHTG

Along with the strong development of the country in the renovation period is the rapid growth in the number of credit institutions, the diversity of banking types has led to an increase in the number of organizations participating in deposit insurance. By the end of December 2010, the deposit insurance policy had been implemented for 1,160 organizations. Including: 42 commercial banks, 05 joint venture banks, 05 100% foreign-owned banks, 35 foreign bank branches, 12 non-bank credit institutions, 01 central People's Credit Fund and 1,060 grassroots People's Credit Funds (Chart 2.1).

Chart 2.1 Number of organizations participating in social insurance in the period 2000-2010

Source: www.div.gov.vn

Table 2.2 Proportion of organizations participating in social insurance

Type of organization

Quantity	Proportion (%)
Commercial Bank	87	7.50
Non-bank credit institutions	12	1.04
QTDND Central and grassroots	1,061	91.46
Total	1,160	100

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Source: www.div.gov.vn

It can be seen that the majority of organizations participating in the deposit insurance are the People's Credit Funds, accounting for 91.46% of the total number of organizations participating in the deposit insurance. These funds operate on a small scale in each locality, suitable for the characteristics of 80% of the population being rural. Although this type of organization has a total capital mobilization of deposits that is not as large as that of commercial banks, the depositors are the target of the deposit insurance policy, which are customers with limited education and access to information. Although their deposits are small, they are often the entire fortune of the farmer.

- Regulations on insured depositors: According to Article 2, Decree 89; Decree No. 109; Circular No. 03/2006, insured depositors are individuals, households, cooperatives, private enterprises and partnerships depositing money at organizations participating in deposit insurance.

Compared to the provisions of Decree No. 89, the provisions of Decree No. 109 have expanded the scope of insured depositors to include households, cooperatives, private enterprises and partnerships. This expansion is reasonable and has contributed to better protecting the interests of many depositors.

The reason for such a regulation is that the policy's objective is to protect the interests of small depositors and organizations with small capital, who often deposit money for savings, have little ability to access and analyze information about the market and the operations of deposit-taking organizations, so they are susceptible to risks. In addition, this regulation encourages people to deposit money in banks instead of investing in other areas, helping deposit-taking organizations mobilize more capital and thereby provide more credit to the economy.

Other organizations such as joint stock companies, limited liability companies, etc., if they have deposits in banks, are not entitled to insurance benefits because the deposits of these organizations are often for payment purposes, not for savings, and the stability of these deposits is difficult to stabilize. Moreover, these types of organizations often have large scale of operations and have advantages in capturing information. Therefore, the deposit insurance policy in Vietnam does not yet insure the deposits of these organizations.

2.2.2.2. Regulations on types of insured deposits

In Vietnam, based on the provisions of the deposit insurance policy, the insured deposits are deposits in Vietnamese Dong, including: Non-term and term savings deposits; Non-term and term deposits including deposits on personal accounts; Money to buy deposit certificates and bonds recorded in the deposit insurance policy.

A certificate issued by a competent state agency that allows an organization to participate in deposit insurance of depositors being individuals, households, cooperatives, private enterprises and partnerships deposited at an organization participating in deposit insurance, except for the following cases:

Deposits of depositors who are shareholders owning more than 10% of the charter capital or holding more than 10% of the voting shares of that deposit insurance participating organization;

Deposits of depositors who are members of the Board of Directors, Board of Supervisors, General Director (Director), Deputy General Director (Deputy Director) of the organization participating in deposit insurance;

Deposits are used to secure the performance of the depositor's obligations;

Money to buy anonymous valuable papers from organizations participating in deposit insurance

release;

Foreign currency deposits.

The reason for such a regulation is because the state wants to protect small depositors, whose access to information related to banking activities is limited, and there are types of deposits used to guarantee the performance of depositors' obligations to make deposits, bets, and deposits that are not insured because the payment and disbursement of that amount depends largely on the performance of depositors' obligations, thus making banks not proactive in determining the term, causing passivity in capital use, creating instability for banking activities. Furthermore, the deposit insurance policy in Vietnam does not protect foreign currency deposits, which is a measure to protect the domestic currency, prevent dollarization, and support the country's foreign exchange management policy.

Applying the regulations of the deposit insurance policy, by the end of 2010, the insured deposit balance was about 800,000 billion VND, 4 times higher than in 2005 [21].

2.2.2.3. Regulations on insurance payment limits

According to current regulations, the insurance amount paid for all deposits (including principal and interest) of a depositor (individual or legal representative) at an organization participating in the Deposit Insurance is up to 50 million VND.

Initially, when surveying to draft and promulgate the policy, the limit of deposit insurance payment was set at 30 million VND, approximately 5.5 times the average national income per capita and meeting the protection of 80% of customers with currencies that are subject to insurance. However, from 2005 until now, this payment limit has been increased to 50 million VND.

The Deposit Insurance Organization shall make insurance payments when the insured organization is terminated by a competent state agency and the organization becomes insolvent.

Currently, Vietnam is applying a limited-scope deposit insurance mechanism (i.e. setting a maximum deposit payment limit). Thus, with the maximum payment level of 50 million VND (including principal and interest)/person/organization participating in the Deposit Insurance, a person whose total deposit amount is more than 50 million VND when an insurance event occurs will only receive a maximum of 50 million VND, the excess will be paid during the liquidation of the assets of the organization participating in the Deposit Insurance according to the provisions of the Bankruptcy Law 2004. Also according to the regulations, the payment level according to the depositor at an organization participating in the Deposit Insurance means: The Deposit Insurance Organization will make payment to a subject at a bank, not based on the number of savings books (accounts) of that individual, this means that a person with many savings books (accounts) at a bank, when an insurance payment event occurs, they will only receive an insurance amount of 50 million VND.

Currently, Vietnam's insurance coverage limit is relatively low compared to other countries.

world, from the initial level of 30 million VND/person to 50 million VND/person in 2005

million VND/person. If in 2005 this limit was approximately 5 times GDP per capita and protected all deposits of about 80% of depositors, by 2010 this limit was only equivalent to 2.2 times GDP per capita.

Chart 2.2 Social Insurance Payment Limits of Some Social Insurance Systems

(GDP/capita)

5.5 times

Poland

Latvia

Lebanon

Belgium

Iceland

Virtue

Tanzania

Sri Lanka

Greece

Nigeria

Canada

beer colom

Philippines

Taiwan

Kenya

India

Dominican Republic

Om an

Source: [1, p. 132]

2.2.2.4. Regulations related to insurance payment procedures.

When an insured event occurs, the Vietnam Deposit Insurance Organization is responsible for paying the insured deposit amount to depositors at the deposit insurance participating organization with the insured event, including principal and interest up to the time of the insured event, but not exceeding the maximum insured amount prescribed by law, which is 50 million VND. The deposit amount (including principal and interest) exceeding the maximum amount paid by the deposit insurance organization will be paid to depositors during the liquidation of the assets of the deposit insurance participating organization in accordance with the provisions of the Bankruptcy Law.

In Vietnam, the deposit insurance payment process is regulated in legal documents on deposit insurance, according to the provisions of Section VII of Circular No. 03/2000/TT-NHNN5 dated March 16, 2000 guiding the implementation of Decree No. 89/1999/ND-CP and Decree No. 109/2005/ND-CP, Article 17 is supplemented as follows:

as follows: “The payment of insured amounts to depositors is directly carried out by the deposit insurance organization or authorized to be carried out by a credit institution on the basis of an authorization contract in accordance with the provisions of law” . The Vietnam Deposit Insurance Organization shall pay depositors when all of the following conditions are met:

- The depositor must be on the approved payment list;

- The depositor must have documents proving legal ownership of his/her money at the deposit insurance participating organization with the insured event, along with an identity card or passport.

In case the depositor loses documents such as savings books, registered deposit certificates, valuable papers, passports, identity cards, etc., the payment of insurance money to the depositor will be handled according to the instructions of the Vietnam Deposit Insurance Organization.

Payment of insurance money to depositors is carried out according to the following procedures:

Within 15 days of receiving a document from the State Bank terminating the operation of receiving individual deposits, the organization participating in deposit insurance must complete a list of depositors at its organization and send it to the Vietnam Deposit Insurance;

Upon receiving the list of deposits, the Vietnam Deposit Insurance Organization, together with the deposit insurance participating organization, shall check the list of depositors and the amount that the Vietnam Deposit Insurance Organization must pay to each depositor; After agreeing on the list of depositors and the total amount of deposits that the Vietnam Deposit Insurance Organization must pay according to regulations, it shall submit it to the Board of Directors of the Vietnam Deposit Insurance Organization for approval as a basis for organizing the implementation of payment;

Immediately after approval by the Board of Directors, the Deposit Insurance of Vietnam

Nam must announce this payment in the mass media, posted

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