The decision to adjust the maximum payout limit takes effect from 13/7.

Deposit insurance is a mechanism that reimburses individuals for their deposits up to a specified limit when the bank where they have placed their funds becomes insolvent. Banks accepting individual deposits must participate in this type of insurance, with the exception of policy banks.

However, a payout from deposit insurance does not occur immediately when a bank faces difficulties. The obligation to pay arises in three specific cases.

First, a payout is triggered when the State Bank of Vietnam approves the bankruptcy plan of a credit institution or when a foreign bank becomes unable to pay out deposits. Second, it occurs if the State Bank of Vietnam suspends deposit-taking activities of a credit institution under special control and the bank's accumulated losses exceed 100% of its charter capital. The third scenario is when the regulatory authority demands a payout to ensure system stability, social order, and safety.

Previously, over 25 years, the maximum payout limit of Deposit Insurance of Vietnam was adjusted only three times, increasing from 30 million VND to 125 million VND. In the draft seeking feedback on the new limit in February, the State Bank of Vietnam noted that while the socio-economy and the system of credit institutions have developed rapidly, adjustments to the deposit insurance payout limit have not kept pace with market fluctuations.

The payout limit increased more than four times over 25 years, while gross domestic product (GDP) per capita grew by 22 times. This disparity led to a significant decrease in the payout limit to GDP per capita ratio, a trend that could continue as the country aims for double-digit annual growth.

According to the regulator, increasing the limit by nearly three times, from 125 million VND to 350 million VND, is "not overly sudden". This adjustment is considered necessary to boost public confidence in the banking system and help mitigate the risk of mass withdrawals.

Based on the new limit, the proportion of depositors whose funds are fully insured reaches approximately 93,7%, compared to 87,6% under the old limit. While this figure remains lower than the global average of 98%, it falls within the minimum range of 90,0-95,0% recommended by the International Association of Deposit Insurers (IADI) and aligns with Vietnam's Deposit Insurance Development Strategy of 92,0-95,0%.

The scale of insured deposits has seen significant fluctuations over the years, growing from about 66,400 billion VND in 2000 to 10,2 million billion VND at the end of last year. Specifically, during the 2021-2025 period, the balance of insured deposits increased by one and a half times.

Phuong Dong