Circular No. 03/2006/TT-NHNN on guiding certain contents of the Government's Decree No. 89/1999/NĐ-CP dated September 1, 1999 on deposit insurance and the Government's Decree No. 109/2005/NĐ-CP dated August 24, 2005 on amending and supplementing some articles of Decree No. 89/1999/NĐ-CP.

CIRCULAR

Regarding guiding certain contents of Decree No. 89/1999/ND-CP dated September 1, 1999 of the Government on deposit insurance and Decree No. 109/2005/ND-CP dated August 24, 2005 of the Government on amending and supplementing some articles of Decree No. 89/1999/ND-CP

dated September 1, 1999

On August 24, 2005, the Government issued Decree No. 109/2005/ND-CP to amend and supplement certain articles of Decree No. 89/1999/ND-CP dated September 1, 1999

Clause 2 of Article 1 of Decree No. 109/2005/ND-CP of the Government supplements and amends certain provisions of Decree No. 89/1999/ND-CP dated September 1, 1999

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Pursuant to Decree No. 89/1999/ND-CP dated September 1, 1999 of the Government on deposit insurance (Decree No. 89/1999/ND-CP of the Government) and Decree No. 109/2005/ND-CP dated August 24, 2005 of the Government on amending and supplementing certain articles of Decree No. 89/1999/ND-CP dated September 1, 1999 (Decree No. 109/2005/ND-CP of the Government), the State Bank of Vietnam guides the implementation of certain contents of these Decrees as follows:

Section 1

GENERAL PROVISIONS

1. Scope of application:

a) Credit organizations and non-credit organizations permitted to carry out banking activities under the Law on Credit Institutions operating within the territory of the Socialist Republic of Vietnam that accept deposits from organizations and individuals must participate in mandatory deposit insurance (hereinafter referred to as participating organizations). This Circular does not apply to deposit-taking entities permitted by the Government to be exempted from participating in deposit insurance;

b) Deposit insurance customers are those entities specified in Clause 2, Article 1 of Decree No. 109/2005/ND-CP of the Government who have deposits with participating organizations (hereinafter referred to as depositors);

c) Deposit Insurance Vietnam.

2. Insured deposits are deposits in Vietnamese dong made by individual depositors, households, cooperatives, private enterprises, and limited liability companies at participating organizations, except for the following cases:

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

b) Deposits of depositors who are members of the Board of Directors, Supervisory Board, General Director (Director), Deputy General Director (Deputy Director) of the participating organization;

c) Deposits used to guarantee the fulfillment of the depositor's obligations;

d) Money used to purchase anonymous securities issued by the participating organization.

Section 2

ISSUANCE AND RECOVERY OF DEPOSIT INSURANCE CERTIFICATES

3. Deposit Insurance Vietnam issues and recovers deposit insurance certificates for participating organizations.

4. Participating organizations must complete the procedures for joining deposit insurance before commencing operations to accept deposits. For organizations currently accepting deposits but not yet participating in deposit insurance, they must complete the procedures for joining deposit insurance within thirty days from the date this Circular takes effect.

5. The application package for joining deposit insurance includes:

a) Application form for joining deposit insurance according to the prescribed model of Deposit Insurance Vietnam;

b) Decision on establishment and banking operation license or establishment and operation license issued by the competent state management agency;

c) Business registration certificate;

d) Charter and operational regulations;

đ) List of Board of Directors, General Director (Director) and Supervisory Board appointed or approved by the competent state management agency;

e) Financial report of the most recent year confirmed by the competent state management agency or audited (if it has been operating for one year or more). Specifically, the financial report of a People's Credit Fund branch will be solely responsible for its truthfulness and accuracy by the People's Credit Fund branch itself;

g) Charter or operational regulations of the parent unit if the participating organization is a member thereof.

6. Within fifteen days from the date of receipt of the complete application package for joining deposit insurance, Deposit Insurance Vietnam is responsible for issuing a deposit insurance certificate to the participating organization. Simultaneously, Deposit Insurance Vietnam reports in writing to the State Bank of Vietnam. The participating organization must publish three consecutive issues (at least in one central newspaper or one local newspaper where the main office, branches, and transaction offices of the organization receiving the certificate are located) in Vietnamese-language newspapers.

7. Deposit insurance certificates must be publicly displayed. It is strictly prohibited for participating organizations to forge, alter, transfer, lease, or lend deposit insurance certificates.

8. Within five working days from the date of any of the following changes, the participating organization must submit a certified copy of the approval for change in writing to Deposit Insurance Vietnam:

a) Content and scope of operations;

b) Business registration certificate;

c) Charter and operational regulations;

d) Charter or operational regulations of the parent unit if the participating organization is a member thereof.

9. Participating organizations will have their deposit insurance certificates revoked in the following circumstances:

a) Failure to pay the full insurance premium within three months from the due date. In such a case, Deposit Insurance Vietnam must send a written report to the State Bank to report and request immediate cessation of deposit mobilization by the participating organization;

b) The State Bank issues a written notice terminating deposit acceptance operations;

c) A competent state authority issues a written request for the participating organization to terminate transactions to proceed with asset liquidation or the Court announces a decision to initiate asset liquidation proceedings.

10. Within three working days from the date of issuance of the decision to revoke the deposit insurance certificate, Deposit Insurance Vietnam must recover the deposit insurance certificate and publish three consecutive issues (at least in one central newspaper or one local newspaper where the main office, branches, and transaction offices of the organization whose certificate is being revoked are located) in Vietnamese-language newspapers.

11. An organization participating in deposit insurance that has had its deposit insurance certification revoked may be restored to participate in deposit insurance and be reissued a deposit insurance certification if it pays the required insurance premium as stipulated or has been permitted by the State Bank of Vietnam to restore its acceptance of deposits. In this case, the organization participating in deposit insurance must submit a written request to the Deposit Insurance Corporation of Vietnam for restoration of participation in deposit insurance and is responsible for announcing the reissuance of the deposit insurance certification through mass media in accordance with Clause 6 of this Circular.

12. The Deposit Insurance Corporation of Vietnam shall be responsible for insuring the amount of deposits that have been insured for six months from the date of the decision to revoke the deposit insurance certification of the organization participating in deposit insurance.

Section 3

 DEPOSIT INSURANCE PREMIUM

13. Annually, organizations participating in deposit insurance must pay to the Deposit Insurance Corporation of Vietnam a premium equal to 0.15% per year calculated on the average balance of all types of insured deposits at the organization participating in deposit insurance.

14. The Deposit Insurance Corporation of Vietnam shall guide organizations participating in deposit insurance in the preparation of calculation tables and payment of deposit insurance premiums in accordance with regulations on premium payments, as follows:

a) The deposit insurance premium is calculated and paid quarterly in four installments each year and must be deposited into the account of the Deposit Insurance Corporation of Vietnam no later than the first day of the month of the quarter in which the deposit insurance premium is collected.

b) The basis for calculating the deposit insurance premium is the total average balance of all types of insured deposits in the quarter preceding the quarter in which the deposit insurance premium is paid.

c) The amount of deposit insurance premium payable for each quarter is calculated using the following formula:

Where:

- P is the deposit insurance premium payable for the quarter

- The Office of Legal Document Supervision (Ministry of Justice);₀ is the balance of insured deposits at the beginning of the first month of the quarter preceding the quarter in which the deposit insurance premium is collected.

- The Office of Legal Document Supervision (Ministry of Justice);₁/H₂/H₃ is the balance of insured deposits at the end of the first, second, and third months of the quarter preceding the quarter in which the deposit insurance premium is collected;

- is the rate of deposit insurance premium payable for a quarter in a year;

The amount of deposit insurance premium payable shall be rounded to the nearest thousand dong.

d) The Deposit Insurance Corporation of Vietnam shall be responsible for checking the payment of deposit insurance premiums by organizations participating in deposit insurance. If discrepancies are found in the calculation and payment of premiums, the Deposit Insurance Corporation of Vietnam shall be responsible for collecting any outstanding premiums or refunding any overpaid premiums within fifteen working days from the date of discovery. Organizations participating in deposit insurance that fail to pay the deposit insurance premium within the prescribed time limit shall, in addition to paying the outstanding premium, also bear a daily late payment penalty of 0.1% (one-thousandth) of the overdue amount.

15. After thirty days from the deadline for payment of deposit insurance premiums, if an organization participating in deposit insurance has not paid the full deposit insurance premium including penalties, the Deposit Insurance Corporation of Vietnam shall have the right:

a) To request the State Bank (for credit institutions), the Treasury Office, or credit institutions (for other entities permitted to carry out certain banking activities) where the organization participating in deposit insurance maintains an account to deduct funds from the account to transfer the deposit insurance premium and penalty.

b) In the event that there is insufficient balance in the account of the organization participating in deposit insurance to cover the deduction and transfer as mentioned above, the Deposit Insurance Corporation of Vietnam shall report in writing to the State Bank of Vietnam. If, after three months, the organization participating in deposit insurance still fails to pay the full deposit insurance premium, the Deposit Insurance Corporation of Vietnam shall handle the matter in accordance with Clause 9 of this Circular.

16. The Deposit Insurance Corporation of Vietnam shall guide the procedures and formalities related to the calculation and payment of deposit insurance premiums (including penalties) by organizations participating in deposit insurance.

Section 4

 INSPECTION, SUPERVISION OF ORGANIZATIONS PARTICIPATING IN DEPOSIT INSURANCE AND REMEDIAL MEASURES

17. Organizations participating in deposit insurance shall be responsible for submitting to the Deposit Insurance Corporation of Vietnam various reports as prescribed by the Deposit Insurance Corporation of Vietnam.

18. Organizations participating in deposit insurance shall immediately submit a written report to the Deposit Insurance Corporation of Vietnam in the following cases:

a) When encountering difficulties in payment capacity: report the reasons for the occurrence of the incident, anticipated consequences, and measures to address them; the structure and quantity of insured deposits; anticipated temporary shortfall in payment; recommendations to the Deposit Insurance Corporation of Vietnam and relevant state management agencies for support (if necessary).

b) When changing members of the Board of Directors, Supervisory Board, General Director (Director).

 19. Within ninety days from the end of the fiscal year, organizations participating in deposit insurance shall be responsible for submitting annual financial reports to the Deposit Insurance Corporation of Vietnam.

20. The Deposit Insurance Corporation of Vietnam has the right to conduct inspections to ensure compliance with the provisions of Decree 89/1999/ND-CP and Decree 109/2005/ND-CP of the Government by organizations participating in deposit insurance.

21. During the supervision and inspection of organizations participating in deposit insurance, if violations of banking safety regulations are discovered, the Deposit Insurance Corporation of Vietnam has the right to require the organization participating in deposit insurance to immediately take corrective measures and simultaneously submit a written report to the State Bank to monitor and handle the situation.

22. In cases where the Deposit Insurance Corporation of Vietnam deems that the operations of an organization participating in deposit insurance pose a risk of loss of payment capacity, significant asset losses, or severe impact on other credit institutions, it shall immediately report in writing to the State Bank and simultaneously require the organization participating in deposit insurance to promptly take corrective measures.

23. Within a maximum period of ninety days from the date the participating organization's deposit insurance certificate is revoked pursuant to Point a or Point b Clause 9 of this Circular, the Banking Inspection shall be responsible for organizing inspections to conclude on violations and serve as a basis for the Vietnam Deposit Insurance Corporation to participate in financial support or handle deposit insurance payments as prescribed in Section V and Section VI of this Circular.

Section 5

SUPPORT OF THE VIETNAM DEPOSIT INSURANCE CORPORATION FOR PARTICIPATING ORGANIZATIONS IN DEPOSIT INSURANCE

24. The Vietnam Deposit Insurance Corporation will only provide financial support to participating organizations in deposit insurance after the State Bank of Vietnam issues a document determining that the dissolution or bankruptcy of the participating organization may seriously affect the safety of the financial and banking system and political, economic, and social stability. Financial support from the Vietnam Deposit Insurance Corporation can take the following forms: loans, guarantees, purchasing debts of customers at the participating organization, and other forms consistent with the provisions of the law.

25. The Board of Directors of the Vietnam Deposit Insurance Corporation shall examine and decide on the form of financial support.

26. The financial support provided by the Vietnam Deposit Insurance Corporation shall be prioritized for repayment before all other debts of the participating organization.

Chapter 6

PAYMENTS TO DEPOSITORS COVERED BY INSURANCE

27. For participating organizations in deposit insurance determined by competent state authorities to be unable to pay their due debts, within sixty days from the date the competent state authority issues a document requesting the participating organization to cease transactions to proceed with liquidation or from the date the Court decides to initiate asset liquidation procedures for the participating organization according to the law on bankruptcy, the Vietnam Deposit Insurance Corporation shall be responsible for making insurance payment to depositors at the participating organization.

28. The payment of insurance money to depositors shall be carried out as follows:

28.1 The Vietnam Deposit Insurance Corporation shall immediately recover the deposit insurance certificate.

28.2 Within ten working days from the date of receipt of the document from the competent state management authority or the Court, the participating organization must submit the application for insurance payment to the Vietnam Deposit Insurance Corporation. The application includes a list and amount of deposits of each depositor at the participating organization; a list and amount requested by depositors for the Vietnam Deposit Insurance Corporation to make insurance payments.

28.3 Within five working days from the date the participating organization submits the complete application for insurance payment, the Vietnam Deposit Insurance Corporation shall conduct an examination of the documents and ledgers to accurately determine the payment amount.

28.4 Within ten working days from the end of the examination as stipulated in Point 28.3 of this clause, the Vietnam Deposit Insurance Corporation must develop a payment plan for insurance money to depositors and publicly announce the payment of insurance money to depositors in daily newspapers (at least in one central newspaper or one local newspaper where the main office, branches, and transaction offices of the participating organization are located) in Vietnamese for three consecutive issues, while posting the list of depositors eligible for insurance payment at the main office, branches, and transaction offices of the participating organization and payment points. The announcement shall clearly state the location, time, and method of making insurance payments.

28.5 The payment of insurance money to depositors shall be directly conducted by the Vietnam Deposit Insurance Corporation or delegated to a credit institution based on a power of attorney contract in accordance with the law.

28.6 The power of attorney contract for insurance payment between the Vietnam Deposit Insurance Corporation and the credit institution must be signed in compliance with the law. In which, the power of attorney contract must clearly specify the responsibility of the credit institution in using the transferred funds from the Vietnam Deposit Insurance Corporation to make timely and accurate payments. The credit institution authorized by the Vietnam Deposit Insurance Corporation to make insurance payments must meet the following conditions:

a) It is a participating organization in deposit insurance;

b) It meets the safety indicators in banking operations for at least the last six months;

c) It has its main office or branch, transaction office located in a suitable place for making insurance payments.

29. The maximum amount of money that a depositor at a participating organization in deposit insurance can be paid by the Vietnam Deposit Insurance Corporation is fifty million Vietnamese dong (including principal and interest) and is determined as follows:

a) The total balance of all deposits (including principal and interest) of an individual or an organization meeting the deposit insurance criteria under the law at a participating organization shall be combined to determine the insurance payment amount;

b) The insured deposit of joint account holders (including: multiple individuals, one or more individuals and organizations, multiple organizations) shall be considered as a deposit of one depositor, and the maximum insurance payment amount (including principal and interest) is fifty million Vietnamese dong, which will be divided equally among the joint account holders (except in cases where the joint account holders have other agreements and commitments in accordance with the law on account usage). If one of the joint account holders mentioned above has other insured deposits at the same participating organization, those amounts will be added to the portion of the joint ownership account to determine the insurance payment amount for that organization or individual.

c) A depositor whose total insured deposit amount (including principal and interest) at a participating deposit insurance organization is equal to or less than fifty million dong will be fully compensated by the Vietnam Deposit Insurance Corporation. For depositors with a total insured deposit amount (including principal and interest) exceeding fifty million dong, the excess amount over fifty million dong will be paid during the liquidation process of the participating deposit insurance organization in accordance with the laws on dissolution and bankruptcy.

d) In cases where a depositor has a debt obligation to a participating deposit insurance organization, the insured deposit amount of that depositor shall be the difference between the deposit amount and the amount still owed by the depositor to the participating deposit insurance organization.

30. A depositor who is covered by insurance may receive insurance money when meeting the following conditions:

a) Being listed in the Depositor List approved by the Board of Directors of the Vietnam Deposit Insurance Corporation;

b) Submitting a request form along with documents proving legitimate ownership of deposits at a participating deposit insurance organization, together with an identity card or passport;

c) In cases where insurance money is paid to a representative (legal representative or authorized representative), heir, or missing person of the depositor, such individuals must provide documents proving their legitimate ownership of the insured deposits; the recipient of the deposit insurance payment must present full documents proving their right to receive the insurance payment and legitimate ownership of the insured deposits, and must also present a passport or identity card when receiving the money.

d) The Vietnam Deposit Insurance Corporation specifies the detailed procedures, formalities, and sequence for paying deposit insurance to depositors.

31. After ten years from the date the deposit insurance organization first announces the payment of insurance money, any unclaimed insurance money without valid reasons will be added to the operational capital of the deposit insurance organization, and the owner of the insured deposit will lose the right to demand the deposit insurance organization to pay the insurance money.

32. The Vietnam Deposit Insurance Corporation becomes a creditor of the participating deposit insurance organization for the amount of insurance money paid out. The Vietnam Deposit Insurance Corporation is entitled to share in the value of assets according to the order of payment as with depositors in the event of the dissolution or bankruptcy of the participating deposit insurance organization, in accordance with the laws on dissolution and bankruptcy. The Vietnam Deposit Insurance Corporation has the right to participate in the management and liquidation of assets of the participating deposit insurance organization in accordance with the law.

Section 7

COOPERATION IN INFORMATION EXCHANGE AND INSPECTION AND SUPERVISION BETWEEN THE VIETNAM DEPOSIT INSURANCE CORPORATION AND THE STATE BANK OF VIETNAM

33. Cooperation in the field of information exchange:

a) The Vietnam Deposit Insurance Corporation is responsible for providing the State Bank of Vietnam with information related to the operations of participating deposit insurance organizations, including:

- Providing quarterly information on the operations of participating deposit insurance organizations.

- Information on the compliance of participating deposit insurance organizations with deposit insurance regulations and safety in banking operations on a quarterly basis.

- Semi-annual information on financial support and payment of insurance money to participating deposit insurance organizations.

- Annual plans for inspecting the implementation of government regulations on deposit insurance by participating deposit insurance organizations.

- Annual results of classification and assessment of the compliance of participating deposit insurance organizations with deposit insurance regulations.

- Immediate information upon discovering that a participating deposit insurance organization poses a risk of inability to pay or significant loss of capital and assets, adversely affecting other credit institutions.

- Other information about the operations and compliance with laws of participating deposit insurance organizations if deemed necessary.

b) The State Bank of Vietnam provides the Vietnam Deposit Insurance Corporation with information related to participating deposit insurance organizations, specifically:

- The State Bank Inspectorate is responsible for providing inspection and supervision results of participating deposit insurance organizations, including:

+ Announcing participating deposit insurance organizations that violate banking operation safety regulations on a quarterly basis.

+ Annual classification results for participating deposit insurance organizations.

+ Immediate information on participating deposit insurance organizations posing a risk of inability to pay, having high overdue loan ratios, or significant loss of capital and assets, adversely affecting other credit institutions, no later than ten days after the conclusion of the inspection and with the approval of the Governor of the State Bank of Vietnam.

The provision is carried out according to the division of responsibilities for inspection and supervision of the headquarters of financial institutions as stipulated in Circular No. 04/2000/TT-NHNN dated March 28, 2000, guiding the implementation of Decree No. 91/1999/NĐ-CP of the Government.

- The Department of Banks, the Department of Cooperative Credit Organizations, and the State Bank branches in provinces and cities are responsible for providing:

+ Notification of establishment and revocation of operating licenses of participating deposit insurance organizations (within three working days from the date of decision).

+ Notification of partial or complete termination of business activities of participating deposit insurance organizations (within three working days from the date of decision).

+ Notification of division, merger, acquisition, and takeover of participating deposit insurance organizations.

+ Notification of placing participating deposit insurance organizations under special supervision.

+ Provision of all relevant files of participating deposit insurance organizations when the State Bank of Vietnam revokes their operating licenses.

- The Monetary Policy Department and the State Bank's Information Technology Bureau:

+ Cooperate in providing statistical data on the operations of credit organizations within the scope permitted by the Governor of the State Bank.

+ Cooperate in providing relevant statistical data concerning participating organizations in deposit insurance that are assessed to have a risk of losing their ability to pay.

34. In exceptional cases, if it is deemed necessary upon discovering that a participating organization in deposit insurance has a risk of losing its ability to pay or significant asset losses, the Banking Inspection will cooperate with the Vietnam Deposit Insurance Corporation to conduct on-site inspections of such participating organizations.

Section 8

IMPLEMENTATION PROVISIONS

35. This Circular shall take effect fifteen days from the date of publication in the Official Gazette and shall replace Circular No. 03/2000/TT-NHNN dated March 16, 2000 issued by the Governor of the State Bank guiding the implementation of Decree No. 89/1999/NĐ-CP dated September 1, 1999 of the Government on deposit insurance, Decision No. 1077/2001/QĐ-NHNN dated August 27, 2001 issued by the Governor of the State Bank amending and supplementing certain contents of Circular No. 03/2000/TT-NHNN dated March 16, 2000 of the State Bank, and Circular No. 12/2003/TT-NHNN dated December 23, 2003 issued by the Governor of the State Bank amending and supplementing Circular No. 03/2000/TT-NHNN dated March 16, 2000 of the Governor of the State Bank guiding the implementation of Decree No. 89/1999/NĐ-CP dated September 1, 1999 of the Government on deposit insurance.

36. The Director of the Office, Heads of Departments of Commercial Banks and Non-Bank Credit Organizations, Heads of units under the State Bank, Governors of State Bank Branches in provinces and centrally governed cities, Chairmen of Management Boards, General Directors of the Vietnam Deposit Insurance Corporation, Chairmen of Management Boards, General Directors (Directors) of participating organizations in deposit insurance within the scope of their functions and duties are responsible for organizing, guiding, and implementing this Circular.

37. Any supplementation or amendment to this Circular shall be decided by the Governor of the State Bank./.