The Hanoitimes - A new law on deposit insurance might be set in place during the 2011-12 period in an effort to build an effective governing system, the General Director of the Deposit Insurance of Vietnam said .
Deposit insurance is defined as a measure implemented in many countries in order to protect bank depositors, in full or in part, from losses caused by a bank's inability to pay its debts when due. Deposit insurance systems form one component of a financial system's safety net and promote financial stability.
"We feel that a new deposit insurance law, which could help clarify functions on service implementation in order to protect customers while ensuring the effectiveness of the banking system, is a crucial necessity," said General Director Bui Khac Son.
Functions governed by a proper law will lead to more efficient protection, he added.
The Deputy Director of the Deposit Insurance of Vietnam (DIV), Nguyen Manh Dung said that deposit insurers had to take responsibility for supervising deposit receivers.
"Supervision could help protect deposit receivers from unexpected calamities while ensuring the safety of depositors."
Son added that the DIV has developed two monitoring systems whereby remote monitoring depended on data and reports from participants (banks, financial companies, credit funds etc.) in order to make early alerts possible.
Insurers could send messages to alert organisations and other related organs, such as the State Bank, to ask for assistance, he said, while in-place control allowed deposit insurers to visit alerted organisations in order to check for risks.
"In-place controls are currently rare. The new law will have detailed regulations regarding the establishment of such controls," Dung said.