A new law has banned insurance corporations from depositing their idle money in banks other than the State Bank of Vietnam.

Insurance corporations banned from banks

Nguyen Thanh Binh, Deputy Governor of the State Bank of Vietnam said the National Assembly had passed a deposit insurance law that only provided insurance for VND, not foreign currencies or gem stones.

The new law is only applicable to individuals, rather than businesses or families.

"Money deposited by enterprises is usually used as capital and payment, not for savings. The law will protect individuals." Binh said.

The deposit insurance law also restricts the investment activities of insurance companies. To avoid losses, the insurance companies can only use their temporary idle money to buy bonds, SBV treasury bills and deposit money at the SBV.

The new law will take effect on January 1, 2013.

Along with the deposit insurance law, the SBV will also enact a prevention of money laundering law in 2013. The relevent agencies will have to confidentially report dubious transfers of large sums of money to the SBV within 48 hours.