Decree No. 89/1999/NĐ-CP on Deposit Insurance

DECREE

On Deposit Insurance

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THE GOVERNMENT

Pursuant to the Government Organization Law dated September 30, 1992;

Based on the Law on Credit Organizations No. 02/1997/QH10 dated December 12, 1997;

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

DECREE:

Chapter 1:

GENERAL PROVISIONS

Article 1. This Decree stipulates deposit insurance activities in Vietnam to protect the rights and legitimate interests of depositors and contribute to maintaining the stability of credit institutions and ensuring safe and sound banking operations.

Article 2.

1. Credit institutions and non-credit institutions permitted to carry out certain banking activities under the Law on Credit Institutions that accept deposits from 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.

Article 3. Insured deposits are Vietnamese Dong deposits made by individuals at organizations participating in deposit insurance.

Article 4.

1. The amount of insurance coverage paid for all deposits (including principal and interest) of an individual at an organization participating in deposit insurance shall not exceed thirty million Vietnamese Dong.

2. Any change to the maximum insurance coverage specified in Clause 1 of this Article shall be decided by the Prime Minister.

Article 5.

1. The deposit insurance organization is a state financial entity operating without profit objectives, ensuring capital safety and self-financing. The deposit insurance organization has legal personality, maintains its own balance sheet, opens accounts at domestic and foreign banks, has its own seal, receives state capital contributions, and is exempted from various taxes.

2. The Prime Minister decides on the establishment of the deposit insurance organization and approves its Charter.

3. The financial regime of the deposit insurance organization shall be determined by the Prime Minister based on the proposal of the Ministry of Finance and the opinion of the State Bank of Vietnam.

Chapter 2:

DEPOSIT INSURANCE ACTIVITIES

PART 1:

DEPOSIT INSURANCE FEES

Article 6.

1. Organizations participating in deposit insurance must pay deposit insurance fees at a rate of 0.15% per annum calculated on the average balance of individual deposits at the participating organization. This insurance fee rate may be adjusted according to the decision of the Prime Minister based on the proposal of the deposit insurance organization and the opinions of the State Bank of Vietnam and the Ministry of Finance.

2. Organizations participating in deposit insurance may account for the deposit insurance fee as part of their operational expenses.

Article 7. Deposit insurance fees are calculated and paid four times annually as prescribed by the State Bank of Vietnam.

Article 8. If an organization participating in deposit insurance fails to pay the insurance fee within the prescribed period, in addition to paying the outstanding amount, it must also bear a late payment penalty of 0.1% (one thousandth) of the overdue amount per day.

Article 9. If an organization participating in deposit insurance fails to pay the deposit insurance fee, including penalties, within thirty days after the due date, the deposit insurance organization has the right:

1. To request the State Bank of Vietnam to deduct funds from the credit institution's deposit account at the State Bank to cover the deposit insurance fee and penalties if the organization is a credit institution.

2. To request credit institutions and treasuries where the participating organization maintains an account to deduct funds to cover the deposit insurance fee and penalties if the organization is another entity permitted to carry out certain banking activities.

Article 10.

1. If an organization participating in deposit insurance fails to pay the deposit insurance fee beyond three months from the due date, the deposit insurance organization will decide to terminate the insurance and announce this through mass media; simultaneously, it will require the competent state management agency to immediately issue a decision to stop accepting individual deposits from that participating organization.

2. The deposit insurance organization is responsible for insuring the insured deposits of the participating organization for six months from the date of the decision to terminate deposit insurance.

ADMINISTRATIVE VIOLATIONS IN COMPETITIONS - PERFORMANCES, FORMS AND AMOUNTS OF FINES

MONITORING RISKS AND REMEDIAL MEASURES

Article 11.

1. Organizations participating in deposit insurance are responsible for submitting reports to the deposit insurance organization as prescribed by the deposit insurance organization.

2. Organizations participating in deposit insurance must immediately report to the deposit insurance organization in the following cases:

a) Facing difficulties in payment capacity;

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

3. Within ninety days from the end of the fiscal year, organizations participating in deposit insurance are responsible for submitting annual financial reports to the deposit insurance organization.

Article 12.

1. When discovering violations of banking operation safety regulations by organizations participating in deposit insurance, the deposit insurance organization has the right to request such organizations to take corrective measures and report in writing to the State Bank of Vietnam.

2. In cases where the deposit insurance organization deems that the operations of participating organizations pose a risk of losing payment capacity, significant asset losses, or severe impacts on other credit institutions, it has the right to request timely corrective measures from those organizations and report to the State Bank of Vietnam for urgent handling.

Article 13.

1. The deposit insurance organization is responsible for periodically providing relevant information on the operations of participating organizations to the State Bank of Vietnam and related state agencies with authority.

2. The deposit insurance organization has the right to inspect compliance with the provisions of this Decree by participating organizations.

3. The State Bank of Vietnam’s Inspectorate is responsible for providing inspection and supervision results of participating organizations to the deposit insurance organization; promptly coordinating to handle participating organizations at risk of losing payment capacity, violating banking operation safety regulations, and having high overdue loan ratios.

4. In cases where a credit institution is placed under special supervision, the Special Supervision Committee is responsible for regularly informing the deposit insurance organization about the institution's operations to coordinate handling.

SECTION 3:

SUPPORT FOR ORGANIZATIONS PARTICIPATING IN DEPOSIT INSURANCE

INSOLVENCY

Article 14.

1. In cases where an organization participating in deposit insurance is at risk of losing its ability to pay but has not yet reached the level requiring special supervision, the deposit insurance organization may provide support in the following forms:

a) Providing loans to support payment of insured deposits;

b) Guaranteeing special loans to secure funds for payment of insured deposits;

c) Purchasing debts where such debts are secured by collateral.

2. The support measures mentioned in Clause 1 of this Article shall be examined and decided upon by the Board of Directors of the deposit insurance organization.

Article 15. In all cases stipulated in Article 14 of this Decree, the deposit insurance organization shall only implement support measures after determining that the continued operation of organizations participating in deposit insurance is important for ensuring the safety of the entire system and political, economic, and social stability.

SECTION 4:

PAYMENT OF INSURED DEPOSITS

Article 16.

1. When an organization participating in deposit insurance is terminated by a competent state authority and it loses its ability to pay, the deposit insurance organization shall be responsible for paying insured deposits of depositors at the participating organization according to the principles set forth in Article 4 of this Decree.

2. The amount of deposits (including principal and interest) exceeding the maximum amount payable by the deposit insurance organization will be paid to depositors during the liquidation process of the participating organization in accordance with the provisions of the Bankruptcy Law.

Article 17. Payment of insurance money to depositors shall be made through banks, or pursuant to an agreement with depositors.

Article 18. Payment of insurance money to depositors or their legally authorized representatives shall be based on a list of depositors prepared jointly by the deposit insurance organization and the participating organization, and on valid documentation.

Article 19. In cases where the operational capital of the deposit insurance organization temporarily does not suffice to support organizations participating in deposit insurance experiencing difficulties in payment capacity or to pay insurance money to depositors at participating organizations declared bankrupt, the deposit insurance organization must report to the State Bank of Vietnam so that the State Bank can submit to the Prime Minister for approval to allow the deposit insurance organization to borrow from credit institutions or other entities guaranteed by the Government.

SECTION 5:

MANAGEMENT AND LIQUIDATION OF ASSETS FOR PARTICIPATING ORGANIZATIONS

INVOLVED IN BANKRUPTCY OF DEPOSIT INSURANCE.

Article 20. In cases where an organization participating in deposit insurance goes bankrupt, the deposit insurance organization becomes a creditor of that organization for the amount paid to depositors. The deposit insurance organization has the right to participate in the management and liquidation of assets of the participating organization in accordance with the Bankruptcy Law.

Article 21. The proceeds from the liquidation of assets of a participating organization declared bankrupt shall be replenished into the operational capital of the deposit insurance organization.

Chapter 3:

IMPLEMENTING PROVISIONS

Article 22. This Decree shall take effect fifteen days from the date of signature.

Article 23. The Governor of the State Bank of Vietnam is responsible for guiding the implementation of this Decree.

Article 24. Ministers, Heads of ministerial-level agencies, Heads of agencies under the Government, Chairpersons of provincial People's Committees directly under the Central Government, Chairpersons of the Board of Directors of deposit insurance organizations, and participating organizations are responsible for implementing this Decree.