Vietnam deposit insurance activities after the deposit insurance law

4. Research object and scope

4.1. Research objects :

Deposit insurance activities were carried out by the Vietnam Deposit Insurance Corporation before and after the Law on Deposit Insurance was issued and put into effect.

4.2. Research scope :

Regarding content : The research topic is on the deposit insurance activities of the Vietnam Deposit Insurance Corporation from the perspective of the Finance - Banking sector with contents such as legal basis, insurance principles, current policy system, and operations for deposit insurance activities of the Vietnam Deposit Insurance Corporation.

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Regarding space: The thesis studies the deposit insurance activities of BHTGVN and some countries with strong development of deposit insurance such as the US and Japan. Deposit insurance activities are very diverse and complex, so the thesis only focuses on studying some main activities that are deeply affected by the Law on Deposit Insurance.

About time : The thesis studies the activities of the Social Insurance of Vietnam before and after the Law on Social Insurance up to now, proposing solutions for the period 2020 - 2015.

5. Methodology and research methods

5.1. Methodology :

The thesis research is based on the research methodology of Marxism-Leninism, dialectical materialism, historical materialism, combined with methods of analysis, comparison, synthesis and statistics.

5.2. Research method:

The main method is to compare the activities of the Social Insurance before and after the Law on Social Insurance, both successes and limitations, to find the causes of limitations from the Social Insurance Law or the implementation of the Law or the conditions for implementing the Social Insurance Law from within the Social Insurance of Vietnam and outside.

The thesis uses textbooks, theses, dissertations, scientific works, documents, and domestic and foreign data published related to the topic.

The thesis also selectively inherits theoretical and practical issues raised by previous researchers, documents published in magazines, articles, newspapers, summary reports of BHTGVN over the years, the practical financial and banking situation in Vietnam and foreign sources.

6. Theoretical and practical significance of the thesis

6.1. Theoretical significance :

Systematically discuss basic issues of social insurance activities such as concept, nature, economic nature, legal nature, legal aspects of social insurance operation models.

6.2. Practical significance :

The thesis evaluates the practical activities of the Vietnam Social Insurance before and after the Law on Social Insurance, thereby pointing out the shortcomings and directions for improving social insurance activities in Vietnam.

The research results of the thesis will be a reference for the activities of social insurance of social insurance policy makers in Vietnam. At the same time, it is also a useful reference for research and study activities on finance, finance - banking, social insurance in Vietnam.

7. Structure of the thesis

In addition to the Introduction, Conclusion and References, the main content of the thesis includes 3 chapters:

Chapter 1: SOME BASIC THEORETICAL ISSUES ON DEPOSIT INSURANCE Chapter 2: OPERATIONS OF VIETNAM DEPOSIT INSURANCE

BEFORE AND AFTER THE DEPOSIT INSURANCE LAW

Chapter 3: SOLUTIONS TO STRENGTHEN DEPOSIT INSURANCE ACTIVITIES ACCORDING TO THE DEPOSIT INSURANCE LAW

Chapter 1

SOME BASIC THEORETICAL ISSUES ON DEPOSIT INSURANCE

1.1. The nature of deposit insurance

1.1.1. Concept and characteristics of deposit insurance

1.1.1.1. History of formation and development of deposit insurance

The concept of deposit insurance has been known to many countries for a long time. When public deposit insurance activities did not appear, deposit protection was implemented by many countries in the form of "implicit protection". The form of implicit protection is that the State Bank or the Government has a non-public commitment to ensure the return of deposits to depositors if there is a bank closure or the bank is unable to pay the depositors. Because it is a non-public commitment, there is no insurance contract between the depositor and the bank or the State Bank. Originating from "implicit protection", the form of "public protection" or deposit insurance was born. Public deposit protection is a policy to ensure that all or part of the deposits along with the principal interest on the deposit account will be paid to the depositor according to the contract mechanism or public commitment and first appeared in New York (USA) under the name "Bank Liability Protection Program".

The operation of American banks in the early 1930s continued to be difficult, especially the biggest financial crisis in history in 1929-1933 caused more than 4,000 banks and 1,700 credit institutions in the US to close. The Federal Deposit Insurance Corporation (FIDC) was established on January 1, 1934. This model is considered the first example of deposit insurance. The establishment of FIDC regained the trust of the people after a series of bank failures, FIDC helped the US escape economic difficulties and continue to develop. FIDC brought success to the US economy, other countries in the world recognized the important role of deposit insurance activities for the stable development of the economy and from there established their own deposit insurance organizations. In the 1960s, only 6 countries in the world built a deposit insurance system: India, Norway, Philippines, Canada, Finland, Dominican Republic, in 1970 there were 5 more countries (Argentina, Spain, Netherlands, Belgium, Austria). Most countries built a deposit insurance system in the late 1990s. In essence, the commitment

This disclosure forms an insurance contract between three partners: the deposit insurance organization, the deposit insurance organization (which is the deposit mobilization organization) and the depositor (the depositor is the subject of deposit insurance).

1. Deposit insurance is a guarantee to repay deposits to insured depositors within the insurance payment limit when the deposit insurance organization becomes unable to repay deposits to depositors or goes bankrupt.

2. The insured person is an individual whose deposits are insured at the Deposit Insurance Corporation .

3. Organizations participating in deposit insurance are credit institutions and foreign bank branches established and operating under the Law on Credit Institutions that are allowed to receive deposits from individuals.

4. The deposit insurance organization is a state financial organization, operating not for profit, implementing the deposit insurance policy, contributing to maintaining the stability of the credit institution system, ensuring the safe and healthy development of banking activities.

5. Deposit insurance premium is the amount of money that the deposit insurance company must pay to the deposit insurance organization to insure the deposits of insured depositors at the deposit insurance company.

Deposit insurance is a type of non-commercial insurance, credit institutions and other organizations with banking activities receiving deposits from individuals... must participate in paying deposit insurance premiums to the national deposit insurance organization according to regulations. When a risk occurs, that is, the insured organization becomes insolvent or unable to pay to depositors, the deposit insurance organization will be responsible for standing up for that credit institution to pay the insured deposits of depositors at the credit institution. Deposit insurance is an insurance mechanism to ensure the stability of the credit system by ensuring payment of part or all of the deposit amount to depositors at credit institutions that are insolvent. Thus, deposit insurance is an important tool to create a stable mentality and establish trust for depositors in the credit system. Thereby, deposit insurance has contributed to preventing a chain collapse when one or several credit institutions in the system temporarily or completely lose their ability to pay. Because of these meanings, deposit insurance has become a mandatory practice for credit institutions with banking activities in most countries in the world, including Vietnam.

In Vietnam, Decree 89/1999/ND-CP dated September 1, 1999 of the Government on Deposit Insurance does not have a specific definition of Deposit Insurance but clearly states three basic purposes of Deposit Insurance.

Deposit insurance activities in Vietnam are as follows: " Deposit insurance activities in Vietnam aim to protect the legitimate rights and interests of depositors; contribute to maintaining the stability of credit institutions; ensure the safe and healthy development of banking activities ". Thus, we can generally understand deposit insurance as follows: " Deposit insurance is a public commitment of the deposit insurance organization to the deposit insurance organization that the deposit insurance organization will pay deposits including part or all of the principal and interest to depositors when the deposit insurance organization is terminated and is unable to pay depositors ".

1.1.1.2. Role and characteristics of deposit insurance organizations

* The role of deposit insurance organizations

The role of the deposit insurance organization depends on the model in which the organization is regulated, allowing organizations to attempt to perform different functions and tasks to achieve the ultimate goal of protecting depositors and ensuring the safe development of the banking system.

Deposit insurance plays a very important role in the stability of socio-economic development. It contributes to protecting depositors, ensuring the safety and soundness of banking operations, promoting capital mobilization for development and handling financial crises. Deposit insurance has the following basic purposes: i) Protecting small depositors with limited information on the operations of deposit-taking institutions. ii) Contributing to ensuring the financial-banking system operates healthily and stably and preventing bank failures through business operations. iii) Contributing to building a healthy financial market with equal competition among financial institutions of different sizes and types. iv) Reducing the burden on the Government in the event of a credit institution's failure; reducing the burden on taxpayers in the event of a bank failure (the State does not have to use the state budget to handle the failure of credit institutions). In addition, the role of the Deposit Insurance Organization in ensuring the safe and sustainable development of the banking system is demonstrated in three aspects:

Firstly , the deposit insurance activities have the effect of creating favorable conditions for newly established banks or banks with limited scale of operation to have better conditions for development. With small banks or banks that have just come into operation, people are worried that they may lose their deposits because the deposit receiving bank is "closed". However, when

If these organizations participate in the deposit insurance, this mentality will be relieved, helping banks develop better.

Second , the deposit insurance activities help banks that are really weak and cannot continue to operate to withdraw from the banking business in an orderly manner, without affecting other banks. Through its inspection and supervision activities, the deposit insurance organization is able to promptly assess the operational status of banks participating in the deposit insurance. For example, in case a bank is found to be operating weakly or ineffectively, the deposit insurance organization will implement a number of support measures, such as: (1) paying deposit insurance to depositors who are subject to deposit insurance; (2) applying a number of handling measures according to its authority ; (3) participating in the process of liquidating the assets of that bank to continue to protect the interests of depositors whose money is larger than the deposit insurance payment limit .

Third , deposit insurance activities create motivation for banks to monitor each other, encourage each other to improve the quality of operations, thereby ensuring the sustainable development of the entire national banking and financial system.

* Characteristics of Deposit Insurance

- Deposit insurance is a type of civil liability insurance of deposit mobilization organizations towards depositors. "Civil liability" in this case is the responsibility to repay deposits (including principal and interest) to depositors when there is a risk of insolvency for that organization.

- Deposit insurance is a compulsory and non-commercial insurance . This is a compulsory insurance because all organizations that mobilize deposits must participate in deposit insurance to protect the interests of depositors and the safety of the banking system, and almost all countries in the world have this provision in the Law regulating deposit insurance activities. Deposit insurance is a non-commercial activity because deposit insurance does not operate for profit but with the biggest goal of protecting the interests of depositors and maintaining the stability of the national financial system.

1.1.2. Objectives and objects of Deposit Insurance

1.1.2.1. Objectives of BHTG

+ Protecting the interests of depositors: Is the top goal of BHDT. Organization

The Deposit Insurance Organization was established to protect the interests of depositors in banks and other financial institutions when they encounter risks. Depositors are those who lend money to banks or have money that is similar to deposits in other financial institutions such as money in securities trading accounts at securities companies, or money in insurance companies.

+ Ensuring the safety of the national financial and monetary system, avoiding chain collapse or crisis: Deposit insurance first of all creates a mechanism to monitor, warn, prevent and support deposit insurance organizations to avoid risks in business. Next, the consequence of deposit insurance is to create a sense of security for all depositors, avoid the situation of simultaneous withdrawal of depositors when there is a collapse of one or several banks, prevent the spread of credit collapse, create a chain effect in the system of banks and deposit mobilization organizations.

+ Create an official deposit insurance mechanism in handling bank failures: Depending on the State's awareness and the Government's financial capacity, the deposit insurance organization is established or not, or established at what level. Up to now, there are 103 countries in the world with deposit insurance organizations, 16 other countries are promoting research to establish. In the remaining countries, the Government does not declare deposit insurance for residents and does not establish a deposit insurance organization but will handle failures and make deposit insurance payments on a case-by-case basis. When there is a failure, depending on each specific case and circumstance, the Government will declare whether or not there is deposit insurance for the people and how much insurance depends on the Government's will and financial capacity.

+ Reduce the financial burden on the Government, create fairness and competitive motivation for deposit insurance organizations: Deposit insurance organizations are established to help the Government shoulder the responsibility of insuring depositors.

1.1.2.2. Subjects of Deposit Insurance

1.1.2.2.1. Organizations participating in social insurance

Deposit insurance organizations are credit institutions and foreign bank branches that receive deposits from individuals, including commercial banks, cooperative banks, people's credit funds and foreign bank branches established and operating under the provisions of the Law on Credit Institutions.

1.1.2.2.2. Social Insurance Organization

The Deposit Insurance Organization is a financial organization established by the Prime Minister and its functions and tasks are regulated. The Deposit Insurance Organization has legal status, operates not for profit, ensures capital safety and self-compensates for costs, implements the Deposit Insurance policy, contributes to maintaining the stability of the credit institution system, and ensures the safe and healthy development of banking activities.

1.1.2.2.3. Depositors are eligible for insurance

An insured depositor (insured person) is an individual whose deposits are insured at a deposit insurance institution. Depositors whose deposits are insured will benefit directly from the deposit insurance policy by receiving insurance payments from the deposit insurance institution when their deposit-taking institution closes down and becomes insolvent.

1.1.2.2.4. Types of deposits subject to insurance

Insured deposits are deposits in Vietnamese Dong of individuals deposited at the BHTG in the form of term deposits, non-term deposits, savings deposits, deposit certificates, promissory notes, and treasury bills.

1.1.3. Tools of Deposit Insurance

1.1.3.1. Certificate of participation in Deposit Insurance

CNTG BHTG is a legal document issued by BHTGVN to credit institutions participating in compulsory BHTG (except for the Bank for Social Policies) to certify that these institutions have participated in BHTG and are entitled to full rights and obligations as prescribed by the law on BHTG. The issuance of CNTG BHTG is considered a legal basis to ensure the implementation of the State's policy on BHTG, and at the same time affirms BHTGVN's commitment to depositors at BHTG financial institutions, that is, their legitimate rights and interests have been protected, immediately.

even if the BHTG TCTG is dissolved or bankrupt.

* Regarding the issuance of BHTG CNTG: BHTG TCTG will be newly issued BHTG CNTG when newly established or formed after merger according to the provisions of law within 15 days before the opening date of operation.

Vietnam deposit insurance activities after the deposit insurance law - 2

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