Central banks policies on deposit insurance

1
Central banks policies on deposit insurance

• PhD Le Xuan Nghia
• Director of Banking Strategy Development
  Department
• State Bank of Vietnam

2
1. Who is the actual deposit insurer in Vietnam?

• SBV provides insurance to all banks.
• DIV only provides insurance to small and medium
  financial institutions.

3
2. Function of State Bank of Vietnam in deposit
insurance activities

• Insurance without premium collection.
• As a guarantee agency for all banks
• Providing insurance for all deposits of
  individuals, enterprises and other institutions.
• Not being financed by premiums but from
  recapitalization of central bank.

4
3. Banking supervision

• Conduct overall supervision on operations of
  banks and cooperative credit institutions.
• Conduct supervision as the owners representative
  of state-owned commercial banks.
• Conduct off-site supervision.
• Conduct on-site examination

5
4. Supervision Effectiveness

• Off-site supervision starts to be conducted on
  the basis of indicators of Basel I and CAMEL.
• So far, fairly effective on-site examination has
  contributed to the stability of banking system.
• Absence of Managerial information system
• Supervision regulations and procedures need to be
  renovated.
• Supervision system needs to be restructured.

6
5. Strategic plan of deposit insurance

• In the long term, DIV will be responsible for
  deposit insurance for the whole banking system.
• The transition process needs a long-term roadmap
  which mainly depends on financial capacity,
  supervisory capabilities and credibility of DIV.
• For the time being and in the medium term,
  central bank maintains its role to ensure the
  stability and sustainable development of the
  financial system.

7
6. Coordination between DIV and SBV

• Sharing information and analysis report and
  forecasting results.
• Sharing the supervisory responsibility with
  effectiveness and low cost.
• SBV supports to enhance the institution capacity
  and financial capacities of DIV.
• Gradually sharing deposit insurance
  responsibilities to small-scale banks.

8
7. Conclusions

• Vietnam implements a true deposit insurance
  policy on banking system.
• A traditional approach toward the safety
  guarantee policy on banking system
• The current deposit Insurance policy need further
  improvement in accordance with international
  standards
• A lack of transparent and feasible development
  roadmap for deposit insurance to take over some
  current function of the State Bank.
• Restructuring roadmap of DIV is not well define
  in its development strategy.

9
Thank you !

• Q A