Decree No. 109/2005/ND-CP on Amending and Supplementing Certain Provisions of Decree No. 89/1999/ND-CP dated September 1, 1999 of the Government on Deposit Insurance

DECREE

Regarding amendments and supplements to certain articles of Decree No. 89/1999/NĐ-CP dated September 1, 1999 of the Government on deposit insurance

DECREE

Pursuant to the Law on Organization of the Government dated December 25, 2001;

Pursuant to the Law on Credit Institutions No. 02/1997/QH10 dated December 12, 1997 and the Law Amending and Supplementing Certain Articles of the Law on Credit Institutions No. 20/2004/QH11 dated June 15, 2004;

At the proposal of the Governor of the State Bank of Vietnam,

THE GOVERNMENT

Article 1. Amend and supplement certain articles of Decree No. 89/1999/NĐ-CP dated September 1, 1999 of the Government on deposit insurance as follows:

1. Clause 2 shall be amended and supplemented as follows:

"1. Credit institutions and non-credit institutions permitted to carry out certain banking activities under the Law on Credit Institutions that accept deposits from organizations and individuals must participate in mandatory deposit insurance.

2. Organizations participating in deposit insurance must publicly display information about their participation in deposit insurance at their headquarters and transaction locations."

2. Article 3 shall be amended and supplemented as follows:

"Deposits insured are deposits in Vietnamese dong made by individual depositors, households, cooperatives, private enterprises, and limited liability companies deposited with participating insured 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 insured 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 insured organization;

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

d) Purchased securities, except for certain securities according to the guidance of the State Bank of Vietnam."

4. Clause 2 of Article 5 is amended and supplemented as follows:

"1. The amount of insurance paid for all deposits including principal and interest of a depositor (an individual or his/her lawful representative) at a participating insured organization within the scope defined in Article 3 of this Decree shall not exceed VND 50 million.

2. The adjustment of the maximum insurance amount specified in Clause 1 of this Article shall be decided by the Prime Minister based on the proposal of the deposit insurance organization and the opinion of the State Bank of Vietnam and the Ministry of Finance."

4. Article 6 is amended and supplemented as follows:

"1. Deposit insurance premium is the amount of money that participating insured organizations are obligated to pay to the deposit insurance organization to insure customer deposits. The deposit insurance premium is recorded as part of the operating expenses of the participating insured organization.

2. Participating insured organizations must pay the deposit insurance premium at a rate of 0.15% per annum calculated on the average balance of insured deposits at participating insured organizations as stipulated in Article 3 of this Decree.

3. The adjustment of the deposit insurance premium rate specified in Clause 2 of this Article according to the type of participating insured organization or based on the assessment and classification by authorized state agencies shall be decided by the Prime Minister based on the proposal of the deposit insurance organization and the opinion of the State Bank of Vietnam and the Ministry of Finance."

5. Article 14 shall be amended and supplemented as follows:

"1. The deposit insurance organization may provide financial support to participating insured organizations in the forms of loans, guarantees, purchase of debts, and other appropriate forms in accordance with the law.

2. The financial support referred to in Clause 1 of this Article shall be decided by the Board of Directors of the deposit insurance organization."

6. Article 15 is amended and supplemented as follows:

"1. The deposit insurance organization will only consider and decide to provide financial support to participating insured organizations as stipulated in Article 14 after the State Bank of Vietnam determines that the liquidation or bankruptcy of the participating insured organization could cause serious and widespread impacts on the safety of the financial and banking system and political, economic, and social stability.

2. The implementation of financial support referred to in Clause 1 of this Article shall be considered as the application of special asset measures by the deposit insurance organization to restore the business operations of the participating insured organization. This financial support will be prioritized for repayment before all other debts of the participating insured organization."

7. Article 16 is amended and supplemented as follows:

"1. For participating insured organizations determined by competent state authorities to be unable to repay maturing debts, within 60 days from the date the competent state authority issues a notice requiring the organization to cease transactions to proceed with asset liquidation or from the date the court announces the commencement of liquidation proceedings under the law on bankruptcy, the deposit insurance organization shall be responsible for making insurance payments to depositors at the participating insured organization according to the principles set forth in Article 4 of this Decree while simultaneously processing the decision to terminate deposit insurance.

2. The excess deposit amount (including principal and interest) over the maximum amount that the deposit insurance organization can pay will be returned to depositors during the liquidation process of the participating insured organization in accordance with the law on dissolution and bankruptcy."

8. Article 17 is amended and supplemented as follows:

"The payment of insurance money to depositors shall be directly carried out by the deposit insurance organization or delegated to credit institutions based on a power of attorney contract in accordance with the law."

9. Article 18 is amended and supplemented as follows:

"1. The payment of insurance money to depositors or their legal representatives or heirs must be based on a list of depositors established by the participating insured organization and approved by the deposit insurance organization based on valid documents.

2. After 10 (ten) days from the first announcement by the deposit insurance organization regarding the payment of insurance money, any unclaimed insurance money will be added to the operational capital of the deposit insurance organization and the owner of the insured deposit will no longer have the right to demand the deposit insurance organization to pay the insurance money.

3. The deposit insurance organization has the responsibility to issue regulations on the documentation, procedures, and sequence of insurance money payments."

10. Article 19 is amended and supplemented as follows:

"In cases where the operational capital of the deposit insurance organization temporarily does not suffice to support participating organizations experiencing difficulties in payment capacity or to pay insurance money to depositors at participating organizations that are compulsorily dissolved due to inability to settle maturing debts or declared bankrupt as stipulated in Article 16 of this Decree, the deposit insurance organization may raise capital through the following forms:

a) Borrowing or receiving special government support capital;

b) Issuing bonds in accordance with the laws on bond issuance;

c) Borrowing from credit institutions or other organizations guaranteed by the government."

11. Article 20 shall be amended and supplemented as follows:

"The deposit insurance organization becomes a creditor of the participating organization with the amount of insurance money paid out. The deposit insurance organization is entitled to share in the value of assets in the order of settlement as for depositors in cases where the participating organization is compulsorily dissolved due to inability to settle maturing debts or declared bankrupt according to the laws on dissolution and bankruptcy. The deposit insurance organization has the right to participate in the management and liquidation process of the participating organization's assets in accordance with the law."

12. Add the phrase "compulsorily dissolved due to inability to settle maturing debts or" before the phrase "declared bankrupt" in Section 5 and Article 21.

Article 2. Implementation clause

1. This Decree shall take effect fifteen days after its publication in the Official Gazette.

2. The State Bank of Vietnam is responsible for guiding the implementation of this Decree.

3. Ministers, Heads of ministerial-level agencies, Heads of agencies under the Government, Chairmen of provincial and centrally-run city People's Committees, Chairmen of the Board of Directors of deposit insurance organizations, and participating organizations are responsible for implementing this Decree./.