Disseminating deposit insurance policy: To promote the reputation of People’s Credit Funds


The term “People’s Credit Funds” sounds unfamiliar to people living in cities where they have access to many banks easily. In fact, it provides capital to million people in provinces, rural and remote areas. In order to promote the public confidence in the People’s Credit Fund (PCF) system, over the years, the DIV has made relentless efforts to hold communication events, which reflected DIV’s commitment to “protect rights and legitimate interests of depositors”. The PCF system has therefore seen constant growth.

PCFs contribute to the local economic development

In the context of economic uncertainties and banking difficulties, the small-scaled PCF system has faced many challenges.

However, thanks to PCF’s special characteristics and the active support granted by the DIV in examination, supervision and communication to disseminate deposit insurance policy to people, the public confidence was reinforced, negative prejudices against the failure of PCFs in the past were removed. The PCF system has asserted its role in providing capital to timely and effectively meet the public capital demands, contributing to the local socio-economic development.

After 20 years from the re-establishment of Bac Ninh, credit activities in the province were brought into full play while PCFs’ financial capacity was fostered. It is apparently seen that the capital level of 26 local PCFs continued to increase in a stable manner. As of June 2018, total capital of the PCF system was more than 2.876 billion dongs; total outstanding loans was 1.952 billion dongs, up by 7,67% (y-o-y). Almost all local PCFs complied with prudential operational ratios. Their scale was expanded while the non-performing loan ratio was below the required level. The SBV’s regulations on interest rates were seriously followed.

Mr. Nguyen Nhu Don, Director of the SBV regional branch in Bac Ninh – quoted that the support of the DIV to disseminate deposit insurance policy to the public and enhance the confidence in the PCF system helped bring about these fruitful results. He highlighted that deposit insurance policy played an important role in protecting the rights and benefits of depositors, guaranteeing the security, political and social orders locally.

Accordingly, almost all PCFs in this area have overcome initial difficulties, operated effectively and guaranteed liquidity. Several PCFs extended its operating scope, areas and effectiveness in order to serve the members better. Achievements were highlighted at Tuong Giang, Dinh Bang, Trang Ha, Chau Khe (Tu Son), Vo Cuong, Dai Phuc, Van An (Bac Ninh), Ho, An Binh (Thuan Thanh) where the capital mobilization, outstanding loans and incomes got higher year after year.

Confidence in the Government’s deposit insurance policy

Since establishment in 1996, over 22 years, the directions of the SBV and the support of the DIV have helped the PCF in Lim commune, Tien Du district, Bac Ninh province overcome barriers to development.

Director of this PCF, Mr. Nguyen Dinh Thanh said the DIV’s supervision, examination and premium collection promoted its effective operation. DIV’s functional assistance helped mitigate the operational risks and promote the PCF’s reputation. Moreover, the DIV disseminated deposit insurance policy to the public and enhanced the confidence in the PCF system. “Deposit insurance policy communication not only promoted the confidence and assurance of depositors when rumors occurred, they also reinforced the PCF’s confidence in operation. We hope that each member of the PCF will be an advocate for deposit insurance policy

Mr. Nguyen Dinh Lac’s family who lives in Lung Son commune got a years-long loan from the PCF in Lim commune for woodworking business. The average annual revenue was 3-5 billion dongs with 10 fulltime employees. When the idle fund is available, his family deposits at the PCF. “We were happy that the deposit insurance coverage limit increased from 50 to 75 million dongs. We deposited money at the PCF for its prestige and our confidence in the Government’s policies other than expected the failure to get insurance” quoted by Mr. Nguyen Dinh Lac.

At Tuong Giang PCF in Tu Son town, Bac Ninh province, the certificate of deposit insurance participation is displayed publicly where depositors can easily see it at transaction desks. Besides, when handling deposits, the PCF staff also explains deposit insurance policy to depositors. “Certificate of deposit insurance participation reflects its commitment to protect the rights and legitimate benefits of depositors and helps enhance the public confidence in the PCF system. Depositors are less anxious to deposit at the PCF. In other words, thanks to the DIV’s companionship, the capital mobilization has constantly grown to meet the capital demands of its members for manufacturing and business. It will therefore contribute to mitigating the shadow banking in rural areas” – said Mr. Doan Ngoc Son, Director of Tuong Giang PCF.

His statement was demonstrated by figures such as: As of 30/6/2018, the total liabilities of Tuong Giang PCF were 426 billion dongs of which the deposits were 385 billion dongs. Tuong Giang is among the healthiest PCFs in Bac Ninh.

At the deposit insurance communication events, the PCFs shared that deposit insurance policy dissemination at PCFs through various channels helped assure local people to deposit, mobilize sufficient existing funds to meet the capital demands and improve the local economic effectiveness. PCFs expressed their expectations that the DIV would implement more communication events to enhance depositors’ awareness of deposit insurance policy, confidence in the banking system in general and the PCFs in particular.

Research and International Cooperation Department