Circular No. 24/2014/TT-NHNN guiding certain contents regarding deposit insurance activities

STATE BANK OF VIETNAM

CIRCULAR

Guidelines on certain aspects of deposit insurance activities

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Pursuant to the Law on the State Bank of Vietnam No. 46/2010/QH12 dated June 16, 2010;

Pursuant to the Law on Credit Institutions No. 47/2010/QH12 dated June 16, 2010 2010;

Pursuant to the Law on Deposit Insurance No. 06/2012/QH13 dated June 18, 2012 2012;

Pursuant to Decree No. 68/2013/NĐ-CP dated June 28, 2013, of the Government, detailing and guiding the implementation of the Law on Deposit Insurance;

Pursuant to Decree No. 156/2013/NĐ-CP dated November 11, 2013, of the Government stipulating the functions, tasks, powers, and organizational structure of the State Bank of Vietnam;

At the proposal of the Director of the Legal Department;

The Governor of the State Bank of Vietnam issues this Circular guiding certain aspects of deposit insurance activities:No. contents regarding deposit insurance activities.

PART I

GENERAL PROVISIONS

Article 1. Scope of Regulation

This Circular guides certain aspects of deposit insurance activities: contents of the Deposit Insurance Participation Certificate; issuance and revocation of the Deposit Insurance Participation Certificate in cases of merger or consolidation of participating organizations; posting of copies of the Deposit Insurance Participation Certificate at participating organizations; deadlines for payment and calculation of deposit insurance premiums; time of occurrence of the obligation to pay deposit insurance; procedures for paying deposit insurance and recovery of the amount of deposit insurance from participating organizations; opening and using accounts of the Vietnam Deposit Insurance Fund at banks and the State Bank of Vietnam (hereinafter referred to as the State Bank); purchasing State Bank bills.

Article 2. Applicability

This Circular applies to the following subjects:

1. Vietnam Deposit Insurance Fund.

2. Participating organizations in deposit insurance include commercial banks, foreign bank branches, cooperative banks, people's credit funds, and microfinance institutions.

3. Insured depositors.

4. Other organizations and individuals related to deposit insurance activities.

Chapter II

SPECIFIC PROVISIONS

Article 3. Contents of the Deposit Insurance Participation Certificate

1. The Deposit Insurance Participation Certificate includes the following contents:

a) Name of the deposit insurer;

b) Name of the participating organization;

c) Other contents as prescribed by the Vietnam Deposit Insurance Fund.

2. Within fifteen days from the date of any change in the contents of the Deposit Insurance Participation Certificate as stipulated in point b, Clause 1 of this Article, the participating organization shall request reissuance of the Deposit Insurance Participation Certificate in accordance with Clause 3, Article 7 of Decree No. 68/2013/NĐ-CP dated June 28, 2013 of the Government detailing and guiding the implementation of the Law on Deposit Insurance.

3. In case the Vietnam Deposit Insurance Fund changes the model of the Deposit Insurance Participation Certificate, the Vietnam Deposit Insurance Fund shall notify the participating organization to reissue the Deposit Insurance Participation Certificate.

Article 4. Issuance and Revocation of the Deposit Insurance Participation Certificate in Cases of Merger or Consolidation of Participating Organizations

1. The Vietnam Deposit Insurance Fund shall revoke the Deposit Insurance Participation Certificate issued to the participating organization that has been merged or consolidated when the State Bank revokes its establishment and operation license.

2. The participating organization receiving the merger shall carry out the procedure to request reissuance of the Deposit Insurance Participation Certificate in case there is a change in the information of the Deposit Insurance Participation Certificate as stipulated in Clause 2, Article 3 of this Circular.

3. The newly formed organization after consolidation shall carry out the procedure to request issuance of the Deposit Insurance Participation Certificate in accordance with Article 14 of the Law on Deposit Insurance.

Article 5. Certified copy of the Deposit Insurance Participation Certificate to be posted at participating deposit insurance organizations

1. The certified copy of the Deposit Insurance Participation Certificate to be posted at participating deposit insurance organizations as stipulated in Article 15 of the Law on Deposit Insurance is a certified copy issued by the Vietnam Deposit Insurance Corporation from the original record.

2. The Vietnam Deposit Insurance Corporation issues certified copies of the Deposit Insurance Participation Certificate based on the number of transaction points of participating deposit insurance organizations that accept deposits from individuals.

3. The application dossier for requesting certified copies of the Deposit Insurance Participation Certificate includes:

a) A written request for certified copies of the Deposit Insurance Participation Certificate clearly stating the number of certified copies requested;

b) A list of transaction points accepting deposits from individuals that have not yet been issued certified copies of the Deposit Insurance Participation Certificate for posting;

c) A certified copy of the State Bank of Vietnam's approval document regarding the establishment of transaction points requesting certified copies of the Deposit Insurance Participation Certificate.

4. In case there is a need to issue certified copies of the Deposit Insurance Participation Certificate, participating deposit insurance organizations shall prepare a dossier in accordance with Clause 3 of this Article and submit it directly or through postal service to the Vietnam Deposit Insurance Corporation.

Within three (3) working days from the date of receiving a complete and valid dossier, the Vietnam Deposit Insurance Corporation will examine and compare with the original record to issue certified copies of the Deposit Insurance Participation Certificate to participating deposit insurance organizations. The content of the certified copy must match the content recorded in the original record.

Article 6. Deadline for payment of deposit insurance premium

The deposit insurance premium is calculated and paid quarterly during the fiscal year. At the latest by the 20th day of the first month of each quarter, participating deposit insurance organizations must pay the deposit insurance premium to the Vietnam Deposit Insurance Corporation. If the last day of the payment deadline falls on a public holiday, weekend, or other non-working day, participating deposit insurance organizations may make the payment on the next working day following the holiday or non-working day.

Article 7. Calculation of deposit insurance premium

1. The basis for calculating the deposit insurance premium for the quarter is the average balance of all insured deposit types at participating deposit insurance organizations in the immediately preceding quarter.

2. The amount of deposit insurance premium payable for the quarter is calculated using the following formula:

(tonnes CO

- P: is the amount of deposit insurance premium payable for the quarter.

- S0: is the insured deposit balance at the beginning of the first month of the immediately preceding quarter.

- S1, S2, S3: are the insured deposit balances at the end of the first, second, and third months of the immediately preceding quarter.

- m: is the rate of deposit insurance premium payable.

3. For the first quarter of participation in deposit insurance, the calculation and payment of the deposit insurance premium shall be made according to the following formula:

Where:

- P: is the amount of deposit insurance premium payable for the first quarter.

- Si: is the insured deposit balance on day i (i=1 → n; S1 is the insured deposit balance at the end of the first day of accepting deposits; Sn is the insured deposit balance on the last day of the first quarter).

- m: is the rate of deposit insurance premium payable.

4. Participating deposit insurance organizations after merger or consolidation shall apply the deposit insurance premium calculation formula prescribed in Clause 2 of this Article, where S0 is the total insured deposit balance of the participating deposit insurance organizations involved in the merger or consolidation at the beginning of the first month of the immediately preceding quarter; S1, S2, S3 are the total insured deposit balances of the participating deposit insurance organizations involved in the merger or consolidation at the end of the first, second, and third months of the immediately preceding quarter.

5. Insured deposit balances, deposit insurance premiums, and late or underpaid premiums shall be rounded off to the nearest thousand dong according to the following principles:

a) Rounding up to 1,000 dong if the amount is greater than or equal to 500 dong.

b) Rounding down to 0 dong if the amount is less than 500 dong.

Article 8. Time of Arising the Obligation to Pay Deposit Insurance Money

1. The obligation to pay deposit insurance money arises from the date when the State Bank issues a document terminating special control or a document terminating the application or non-application of measures to restore payment capability, and the participating credit organization still falls into bankruptcy status, or the State Bank issues a document determining that the foreign bank branch participating in deposit insurance has lost the ability to pay deposits to depositors.

2. In the document terminating special control or terminating the application or non-application of measures to restore payment capability as stipulated in Clause 1 of this Article, it must clearly state that the credit organization has not restored its payment capability (fallen into bankruptcy status) as the basis for paying deposit insurance money.

Article 9. Procedures for Paying Deposit Insurance Money

1. Within ten working days from the time the obligation to pay deposit insurance money arises, the participating deposit insurance organization must submit to the Vietnam Deposit Insurance Corporation a request file for paying deposit insurance money. The request file for paying deposit insurance money shall be signed by the representative of the participating deposit insurance organization as stipulated in Clause 2 of this Article, including:

a) A request document for paying deposit insurance money according to the prescribed form of the Vietnam Deposit Insurance Corporation;

b) A list of depositors entitled to deposit insurance money according to the prescribed form of the Vietnam Deposit Insurance Corporation, which clearly states the amount of insured deposits (including principal and interest) and the debt of the participating deposit insurance organization (if any, including principal and interest) of each depositor up to the date when the obligation to pay deposit insurance money arises at the participating deposit insurance organization; the amount of insurance requested to be paid for each depositor entitled to deposit insurance money;

c) A copy of the document terminating special control or terminating the application or non-application of measures to restore payment capability or the document determining that the foreign bank branch has lost the ability to pay deposits to depositors issued by the State Bank as prescribed in Article 8 of this Circular.

2. The representative of the participating deposit insurance organization performs the procedures for requesting payment of deposit insurance money:

a) After the State Bank issues a document terminating special control or terminating the application or non-application of measures to restore payment capability and the participating deposit insurance organization still falls into bankruptcy status, the legal representative of the participating deposit insurance organization continues to be the representative of the participating deposit insurance organization to perform the procedures for requesting the Vietnam Deposit Insurance Corporation to pay deposit insurance money to depositors.

b) In case the participating deposit insurance organization lacks a legal representative or in other necessary cases, the State Bank designates an officer of the participating deposit insurance organization or an officer of the State Bank as the representative of the participating deposit insurance organization to perform the procedures for requesting payment of deposit insurance money.

3. Within five working days from the date of receiving the complete request file for paying deposit insurance money as stipulated in Clause 1 of this Article, the Vietnam Deposit Insurance Corporation conducts an examination of documents and ledgers to determine the amount of insurance money to be paid.

The participating deposit insurance organization is responsible for providing files and documents upon the request of the Vietnam Deposit Insurance Corporation to serve the examination and determination of the amount to be paid.

In case the examination of documents and ledgers to determine the amount to be paid discovers signs of violations exceeding the authority of the Vietnam Deposit Insurance Corporation, the Vietnam Deposit Insurance Corporation reports and recommends the State Bank to examine, inspect, audit, and handle such violations.

Based on the examination results of the Vietnam Deposit Insurance Corporation and the request file for paying deposit insurance money provided by the participating deposit insurance organization, the Vietnam Deposit Insurance Corporation compiles a list of persons entitled to receive insurance money and the amount of insurance money to be paid to each person.

4. Within ten working days from the date of completing the examination as stipulated in Clause 3 of this Article, the Vietnam Deposit Insurance Corporation must have a plan for paying deposit insurance money to the persons entitled to deposit insurance money; publicly announce the location, time, and method of paying deposit insurance money in three consecutive issues of a central newspaper, a local newspaper where the main office and branches of the participating deposit insurance organization are located, and on a Vietnamese online newspaper; post the list of persons entitled to receive insurance money and the amount of insurance money to be paid to each person at the announced location.

Article 10. Recovery of Insurance Payment from Deposit Insurance Participating Organizations

1. From the date of becoming a creditor of deposit insurance participating organizations as stipulated in Clause 1, Article 28 of the Law on Deposit Insurance, the Vietnam Deposit Insurance Corporation shall exercise the rights and obligations of a creditor in accordance with the provisions of the law.

2. The amount of money that the Vietnam Deposit Insurance Corporation must pay to insured depositors at deposit insurance participating organizations that have gone bankrupt shall be determined according to the list of persons entitled to insurance payment and the amount of insurance payment for each person as prescribed in Clause 4, Article 9 of this Circular. The Vietnam Deposit Insurance Corporation shall settle the amount due to insured depositors in accordance with the order of distribution of assets of the failed credit institution as prescribed in the Bankruptcy Law.

Article 11. Opening and Using Settlement Accounts of the Vietnam Deposit Insurance Corporation at Banks

1. The Vietnam Deposit Insurance Corporation may open settlement accounts at banks and can only use these accounts for settlement purposes serving the activities of the Vietnam Deposit Insurance Corporation. The Vietnam Deposit Insurance Corporation shall not deposit funds at credit institutions or foreign bank branches.

2. Deposits in the settlement accounts of the Vietnam Deposit Insurance Corporation at banks shall earn interest at rates set by the bank in accordance with the interest rate regulations of the State Bank of Vietnam during each period.

Article 12. Opening Accounts of the Vietnam Deposit Insurance Corporation at the State Bank of Vietnam

1. The Vietnam Deposit Insurance Corporation may open an account at the State Bank of Vietnam to deposit idle temporary capital and enjoy interest rates determined by the Governor of the State Bank of Vietnam during each period.

2. Procedures for opening accounts of the Vietnam Deposit Insurance Corporation at the State Bank of Vietnam shall be carried out in accordance with the procedures for opening settlement accounts for credit institutions and foreign bank branches at the State Bank of Vietnam.

Article 13. Purchasing Central Bank Bills

1. The Vietnam Deposit Insurance Corporation may use idle temporary capital to purchase central bank bills.

Chapter III

IMPLEMENTATION

Article 14. Responsibilities of Units under the State Bank

1. The Banking Inspection and Supervision Authority:

a) Inspect, audit, handle violations, and resolve complaints and reports regarding deposit insurance;

b) Inspect, audit, and supervise the Vietnam Deposit Insurance Corporation in complying with legal regulations on deposit insurance;

c) Take the lead and coordinate with relevant units to inspect and audit the use of idle temporary capital by the Vietnam Deposit Insurance Corporation in accordance with legal regulations on deposit insurance.

2. Department of Monetary Policy:

Take the lead and coordinate with relevant units to advise the Governor of the State Bank of Vietnam to decide the interest rate for deposits of the Vietnam Deposit Insurance Corporation at the State Bank of Vietnam.

3. Trading Department:

Guide the Vietnam Deposit Insurance Corporation to implement depositing money at the State Bank of Vietnam and purchasing central bank bills in accordance with this Circular and other legal regulations.

4. Branches of the State Bank of Vietnam in provinces and centrally-administered cities: Inspect, audit, handle violations, and resolve complaints and reports regarding deposit insurance within their jurisdiction.

Article 15. Effective Date

1. This Circular takes effect from October 24, 2014.

2. Repeal Clause 2, Section 1, Section 2, Section 3, Section 4, Section 5, and Section 6 of Circular No. 03/2006/TT-NHNN dated April 25, 2006 guiding certain contents of Decree No. 89/1999/NĐ-CP dated September 1, 1999 of the Government on deposit insurance and Decree No. 109/2005/NĐ-CP dated August 24, 2005 amending and supplementing some articles of Decree No. 89/1999/NĐ-CP.

Article 16. Responsibility for Implementation

1. The Board of Directors of the Vietnam Deposit Insurance Corporation and the General Director of the Vietnam Deposit Insurance Corporation within their functions, tasks, and authorities shall be responsible for guiding and organizing the implementation of this Circular.

2. The Head of the Office, the Director of the Legal Department, the Heads of units under the State Bank of Vietnam, the Governors of the State Bank of Vietnam branches in provinces and centrally-administered cities, the Chairmen of the Boards of Directors, the Chairmen of the Boards of Members, the General Directors (Directors) of deposit insurance participating organizations, the Chairman of the Board of Directors, and the General Director of the Vietnam Deposit Insurance Corporation are responsible for organizing the implementation of this Circular./.