What is deposit insurance? Latest regulations on deposit insurance

1. What is deposit insurance?

Deposit insurance is a financial measure that helps protect the interests of depositors at banks or credit institutions. Accordingly, when a bank participating in deposit insurance falls into insolvency or bankruptcy, the deposit insurance organization will refund part or all of the deposit within the prescribed limit.

The deposit insurance system plays an important role in maintaining financial stability and minimizing risks, and strengthen people's confidence in the banking system.

2. Benefits of using deposit insurance

Using deposit insurance brings many practical benefits, especially in the context of unpredictable fluctuations in the economy.

Ensure personal financial security

With deposit insurance, you don't need to worry about losing money when the bank is at risk. Your assets are always protected within prescribed limits, giving you peace of mind when choosing banking services.

Enhance confidence in the banking system

Thanks to deposit insurance, people have more confidence in the safety and transparency of the financial system. This is an important factor promoting the use of banking services, thereby sustainable economic development.

Support when problems occur

In the event of a bank crisis, deposit insurance will be a lifesaver solution to help you quickly receive your deposit back without incurring large losses.

3. Subjects eligible to participate in deposit insurance

Deposit insured person are individuals who have legal deposits at organizations participating in deposit insurance. This includes savings deposits, current deposits, and other deposits as required by law.

Organization participating in deposit insurance include:

• Credit institutions such as commercial banks, people's credit funds, microfinance institutions.
• Foreign bank branches operating in Vietnam are established and operated under the Law on Credit Institutions.

These organizations must participate in deposit insurance, ensure the protection of depositors' interests, and enhance transparency and safety of the banking system.

Note: Businesses, economic organizations, or non-profit organizations are not subject to deposit insurance.

4. Regulations on deposit insurance

Deposit insurance is not only a measure to protect personal assets but also a tool to ensure national financial stability. Both the seller (deposit insurance organization) and the buyer (depositor) need to comply with the following important principles:

4.1. Principles for sellers (Deposit insurance organization)

• Principles to protect depositors' interests: The deposit insurance organization must ensure compensation to depositors when the credit institution goes bankrupt or faces risks, in accordance with the prescribed scope and level of insurance.
• Transparency and disclosure of information: Organization World Insurance Insurance processes, insurance levels, as well as the financial situation of the insurance organization must be transparently disclosed so that depositors can clearly understand.
• Manage and use insurance funds for the right purpose: The insurance fund must be managed and used appropriately, ensuring solvency when an incident occurs.
• Supervise and inspect credit institutions: The deposit insurance organization has the right to request credit institutions to provide information and supervise the operations of these organizations to ensure the safety of the insurance fund.

4.2. Principles for buyers

• Principle of complete information: Depositors must be provided with full information about the deposit insurance services provided by the insurance organization, including the level of insurance, scope and applicable conditions.
• Guarantee the rights of depositors: Depositors have the right to claim compensation in case the credit institution goes bankrupt or is at risk, if their deposits are within the scope of insurance.
• Protect legal rights: Depositors must comply with the regulations of the deposit insurance organization and legal regulations related to protecting their rights in case of an incident.

4.3. Principles of insured deposits

According to Section 3, Chapter II, Article 10 of the Law on Vietnam Deposit Insurance stipulates:

Deposits are insured

Deposits are insured is a deposit in Vietnamese Dong of individuals deposited at organizations participating in deposit insurance in the form of term deposits, demand deposits, savings deposits, certificates of deposit, promissory notes, treasury bills and other forms of deposits according to the provisions of the Law on Credit Institutions, except for the types of deposits specified in Article 19 of the Insurance Law Vietnam.

Deposits are not insured

Deposits at a credit institution by an individual who owns more than 5% of the charter capital of that credit institution.

Deposits at credit institutions of individuals who are members of the Board of Members, members of the Board of Directors, members of the Control Board, General Director (Director), Deputy General Director (Deputy Director) of that credit institution; Deposits at foreign bank branches of individuals who are General Director (Director), Deputy General Director (Deputy Director) of that foreign bank branch.

Money to buy anonymous valuable papers issued by organizations participating in deposit insurance. 

To learn more about the regulations and terms, you can refer to here.

5. Deposit insurance payment limit

According to Decision No. 32/2021/QD-TTg dated October 20, 2021 of the Prime Minister, the deposit insurance payment limit in Vietnam is specifically regulated as follows:

• Maximum payout: The maximum amount of insurance paid is 125 million VND, including principal and interest deposits, applies to all insured deposits of an individual at a participating deposit insurance institution.
• Scope of application: This limit only applies when the insured credit institution is at risk or goes bankrupt, in order to protect the interests of depositors and maintain the stability of the financial system.

Understanding this limit will help you manage your assets more effectively, ensuring maximum safety 

6. Cost of purchasing deposit insurance

Deposit insurance premiums are calculated based on regulations Vietnam Deposit Insurance Law. Important information about this cost includes:

• Insurance premium rate: The current fee is 0.15%/year, calculated on the average deposit balance of insured deposits at credit institutions.
• Fee payment method: Insurance premiums are paid quarterly by participating credit institutions during the fiscal year.
• Maintain fees: Since its inception Vietnam Deposit Insurance (VHTTVN) To date, the fee rate of 0.15% is still maintained, ensuring stability and transparency in insurance policies.

With a reasonable cost, deposit insurance is both a measure to protect personal assets and an important tool to enhance trust in the banking system and credit institutions in Vietnam.

7. Prohibited acts when participating in deposit insurance 

According to Article 10 of the Deposit Insurance Law, the following acts are determined to violate legal regulations and are strictly prohibited:

• Organizations participating in deposit insurance do not pay deposit insurance fees.
• The deposit insurance organization does not pay or does not fully pay the insurance amount.
• Fraud, falsification of records, documents, and papers on deposit insurance.
• Obstructing, causing difficulties, or damaging the legitimate rights and interests of deposit insurance organizations, deposit insurance participating organizations, deposit insured persons, and agencies and organizations related to deposit insurance.
• Abusing positions and powers to violate the provisions of law on deposit insurance.

Strict compliance with these regulations is essential to protect the interests of depositors and contribute to building a transparent, safe and sustainable financial system.

8. Some frequently asked questions about deposit insurance

Some frequently asked questions when customers learn about deposit insurance are:

Is deposit insurance mandatory?

Have. According to legal regulations, credit institutions that receive deposits from individuals must participate in deposit insurance to ensure the rights of depositors.

Are deposits in business accounts insured?

Are not. Deposit insurance only applies to individual deposits at participating insurance organizations, excluding corporate deposits.

How long will it take for depositors to receive insurance if the bank goes bankrupt?

Claim processing time depends on the deposit insurance organization's process and the complexity of the case. However, the Deposit Insurance Law stipulates that the insurance amount will be paid quickly immediately after the official decision on the bank's bankruptcy status.

It can be concluded that deposit insurance is a safe financial solution, helping to protect the interests of depositors against unwanted risks in the banking system. Hopefully this article has helped you understand the regulations and benefits of deposit insurance, helping you make smarter and more effective financial decisions.

SeABank (Southeast Asia Commercial Joint Stock Bank) is proud to be one of the leading prestigious commercial banks in Vietnam with more than 30 years of development. SeABank always comply with the State's mandatory deposit insurance policy, ensuring the safety of all customer deposits. In addition, the bank also provides credit security insurance services - a superior financial solution Helps you stay steadfast against all unexpected risks. Find out now insurance package at SeABank!