I. Legal basis

• Deposit Insurance Law 2025
• Deposit Insurance Law 2012

The State Bank of Vietnam stated that the promulgation of the Deposit Insurance Law 2025 is intended to establish a comprehensive and transparent legal framework, thereby enabling the Deposit Insurance Organization to enhance its financial capacity and participate more deeply in the restructuring process of credit institutions. Accordingly, the Law aims to better safeguard the legitimate rights and interests of depositors, while ensuring the stability of the credit institution system and maintaining social security and safety, in line with the orientations set forth in the Deposit Insurance Development Strategy and the Banking Sector Development Strategy.

II. What is deposit insurance?

Deposit insurance operations constitute a mechanism for protecting depositors and ensuring the safety of the banking system, whereby the Deposit Insurance Organization (a state-owned financial institution operating on a not-for-profit basis) reimburses insured deposits to eligible depositors within the prescribed insurance payout limit upon the occurrence of an insured payment obligation in accordance with applicable regulations.

III. How does deposit insurance protect depositors?

The Deposit Insurance Organization collects premiums from participating members, being credit institutions and branches of foreign banks permitted to accept deposits from individuals in accordance with the Deposit Insurance Law 2025, thereby establishing an insurance reserve fund. Where such institutions become insolvent or are declared bankrupt, this fund shall be utilized to make payments to depositors within the statutory coverage limit. This mechanism is designed to protect the lawful rights and interests of depositors, while contributing to the maintenance of stability in the banking system and ensuring the safe and sound development of banking activities.

IV. Key highlights of the Deposit Insurance Law 2025

1. The issuance of certificates of participation in deposit insurance has been simplified

Pursuant to Article 14 of the Deposit Insurance Law 2012, the procedures for the issuance of certificates of participation in deposit insurance are carried out in the following steps:

• Step 1: Submit an application dossier for the issuance of the certificate to the Deposit Insurance Organization no later than 15 days prior to the date of commencement of operations.
• Step 2: The Deposit Insurance Organization shall review the application and issue the certificate within 05 working days from the date of receipt of a complete and valid dossier.

However, pursuant to Article 15 of the Deposit Insurance Law 2025, this procedure has been simplified. Accordingly, the Deposit Insurance Organization shall issue the certificate of participation in deposit insurance concurrently with the time at which the State Bank grants the operating license (including the License for Establishment and Operation of a credit institution or the License for Establishment of a branch of a foreign bank).

2. The forms of public disclosure of deposit insurance certification shall be further expanded

Pursuant to Article 15 of the Deposit Insurance Law 2012, participating deposit insurance institutions are obligated to publicly post a copy of the Certificate of Participation in Deposit Insurance at all transaction points where deposits are accepted.

However, pursuant to Article 16 of the Deposit Insurance Law 2025, the forms of public disclosure have been expanded and diversified, including:

• Public disclosure at all transaction points where deposits are accepted;
• Public disclosure on the official website of the participating deposit insurance institution (if any) and on the official website of the Deposit Insurance Organization;
• Other forms of public disclosure implemented by participating deposit insurance institutions in accordance with the guidance of the Deposit Insurance Organization.

3. Strengthening the role of the Deposit Insurance Organization in the restructuring of credit Institutions

The Deposit Insurance Law 2025 has amended, supplemented, and clarified the rights and obligations of the Deposit Insurance Organization. Notably, the Deposit Insurance Organization has been vested with additional powers, including: conducting inspections of participating deposit insurance institutions in accordance with plans and scopes assigned by the State Bank; obtaining special loans from the State Bank; participating in the handling of participating deposit insurance institutions placed under special control, including appointing qualified personnel to hold managerial or executive positions or to serve on the Supervisory Board of people’s credit funds as required by the State Bank; participating in the assessment of the feasibility of restructuring plans for credit institutions; purchasing long-term bonds issued by credit institutions receiving compulsory transfers; and extending special loans to participating deposit insurance institutions.

The amendments and supplements to the provisions on the rights and obligations of the Deposit Insurance Organization not only ensure consistency with relevant laws, particularly the Law on Credit Institutions, but also align with the policy of strengthening the role and responsibilities of Vietnam Deposit Insurance in coordinating with the State Bank in handling weak credit institutions.

4. Establishing a basis for earlier insurance payouts to depositors

One of the significant new provisions of the Deposit Insurance Law 2025 is the introduction of regulations permitting the Deposit Insurance Organization to make earlier insurance payouts to depositors, rather than having to wait until a credit institution is declared bankrupt as previously required under the 2012 Law.

Accordingly, the obligation to pay insurance shall be deemed to arise upon the occurrence of any of the following circumstances:

• The bankruptcy plan of a credit institution is approved, or the State Bank issues a written confirmation that a branch of a foreign bank is unable to repay deposits;
• The State Bank issues a written decision to suspend deposit-taking activities of a credit institution under special control, and such institution has accumulated losses exceeding 100% of its charter capital and reserve funds as reflected in its most recent audited financial statements;
• The State Bank issues a written notice on the payment of deposit insurance in necessary cases to ensure the safety of the system, as well as social order and security.

This new provision remedies the shortcomings of the Deposit Insurance Law 2012 by enabling the Deposit Insurance Organization to take a more proactive approach to insurance payouts, thereby stabilizing depositors’ confidence, mitigating the risk of systemic disruption, and better protecting the lawful rights and interests of depositors.

V. Conclusion

It can be seen that the Deposit Insurance Law 2025 marks a significant advancement in the development of the legal framework for depositor protection in Vietnam. Beyond inheriting the provisions of the 2012 Law, the new law introduces a number of substantive reforms, notably the simplification of administrative procedures, the expansion of forms of information disclosure, the strengthening of the role of the Deposit Insurance Organization in the restructuring of credit institutions, and, in particular, the establishment of a mechanism for earlier insurance payouts to depositors.

These changes not only contribute to enhancing the effectiveness of protecting the lawful rights and interests of depositors, but also help to strengthen public confidence in the banking system. At the same time, the enhanced coordination between the Deposit Insurance Organization and the State Bank in handling weak credit institutions will play a crucial role in preventing systemic risks and ensuring national financial security.

In the context of an increasingly developed financial and banking system with more complex and latent risks, the official entry into force of the Deposit Insurance Law 2025 on May 1, 2026 is expected to provide a stronger “shield” for depositors, while contributing to the development of a transparent, stable, and sustainable banking system.

VI. About Us, Hankuk Law Firm

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