On 10/12, the National Assembly approved the revised Law on Deposit Insurance with over 94% of delegates in favor. A key provision in the law outlines the specific conditions for deposit insurance payouts.

Effective from 1/5/2026, deposit insurance will be paid out in three distinct cases. The first is when the State Bank of Vietnam approves a credit institution's bankruptcy plan or a foreign bank becomes unable to meet its deposit obligations, mirroring previous regulations.

The second case is when the State Bank of Vietnam suspends deposit-taking activities of a specially controlled credit institution that has accumulated losses exceeding 100% of its charter capital. The third scenario involves regulatory authorities demanding payments to ensure systemic safety, social order, and security.

Explaining the revisions, Governor Nguyen Thi Hong stated that adding these two new cases ensures timely payouts when a credit institution faces potential systemic instability. This aims to stabilize depositor confidence and enhance the deposit insurance organization's ability to protect depositors' rights.

Governor Nguyen Thi Hong of the State Bank of Vietnam explains the revisions on 10/12. *National Assembly Media*

The National Assembly authorizes the Governor to periodically determine the deposit insurance payout limit, which is the maximum amount (principal and and interest) the deposit insurance organization pays to customers. Currently, this limit is 125 million VND. During earlier discussions, some delegates proposed doubling this amount.

Under the newly approved law, deposit insurance also plays a role in managing credit institutions undergoing early intervention or special control, as well as handling incidents and crises. The insurance unit will assess the feasibility of recovery plans, restructuring, mergers, capital transfers, or bankruptcy plans for specially controlled credit institutions.

Additionally, the deposit insurance organization can provide special interest-free loans to participating banks, with or without collateral. It can also borrow at 0% interest, without collateral, from the State Bank of Vietnam to facilitate early payouts when its professional reserve fund is insufficient.

Anh Tu