The State Bank of Vietnam (SBV) has submitted a proposal to amend the Law on Deposit Insurance in an effort to enhance the role of the Deposit Insurance of Vietnam (DIV) and improve depositor protection, according to Viet Nam News.
After 12 years of implementation, the SBV has identified several challenges within the current framework and aims to revise the law to better support the stability of the country’s credit institution system and improve the overall effectiveness of deposit insurance policies.
Key to the proposal is the expansion of investment opportunities for the DIV. Under the new revisions, the DIV would be allowed to purchase long-term bonds issued by credit institutions that have undergone compulsory transfers. Currently, the DIV is limited to investing its temporarily idle funds in government bonds, SBV bills, or deposits at the SBV, with 99% of the capital being allocated to government bonds. However, the recent decline in bond yields has impacted the DIV’s profitability, with investment returns dropping from 9.41% in 2013 to 3.82% in 2023.
Additionally, the SBV is proposing that the DIV be granted the authority to help set deposit insurance payment limits for people’s credit funds and other credit institutions. The proposal also includes provisions to manage investment risks, with the government being tasked to define specific criteria for investment portfolios, structures, and methods.
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