Deposit insurance facilitates rural economic development in Dong Thap


Dong Thap is one of 13 Mekong Delta provinces in which agriculture is the biggest component in the economic structure. Economic development in rural areas therefore becomes a key responsibility. As of August 31, 2018, total outstanding loan was 54 trillion dongs, increased by 7% compared with early 2018; capital mobilization stayed at more than 40 trillion dongs, with growth of 10% compared with early 2018. The average outstanding loans for rural and agricultural development over the years accounted for 70% of the total loans.


Together with the objective of agricultural economic development, deposit insurance policy actively contributes to the stability of the credit institution system, especially the People’s Credit Funds (PCF) in Dong Thap. PCFs are popular and play an important role in providing capital for manufacturing, eradicating poverty or taking deposits for farmer’s savings. It would therefore guarantee the sufficient fund for manufacturing and investing locally as well as mitigate the shadow banking in rural areas. As of September, 2018, PCFs in the province experienced a high growth rate. Specifically, credit mobilization was 605.985 million dongs, up by 7% compared with early 2018; outstanding loans were 639.718 million dongs, up by 4% against early 2018; Non-performing loans accounted for less than 1% of total loans. Generally speaking, performance of PCFs was safe and sound, compliant with regulations and contributed to the local agricultural economic development.

At the “Deposit insurance policy role in rural economic development” workshop held by the DIV branch in Mekong Delta in coordination with the State Bank’s regional branch in Dong Thap, Mr. Vuong Tri Phong, Deputy Director of the State Bank’s regional branch in Dong Thap stated that: “All 17 PCFs in Dong Thap are insured by the DIV as regulated by the law. The DIV operates for non-profit purposes. Depositors do not pay premiums, however, their rights and benefits are protected, and thus their confidence in the PCFs is reinforced. As a result, PCFs have become popular among local farmers. The DIV cooperates closely with the State Bank’s regional branch in Dong Thap to share information, detect violations and handle problems in PCFs operation.” He also proposed to organize more workshops and communication events to disseminate information to farmers on prudential banking activities to create ground for PCFs development in the province.

Deposit insurance policy contributed significantly to the stability, soundness and growth of the PCFs in Dong Thap, which was praised by relevant authorities. For example, Tan Quy Tay is a PCF in Tan Quy Tay district, Tan Quy Dong commune, Sadec city, Dong Thap which performed stably and effectively. From 2014 to 2017, operating fund of Tan Quy Tay grew averagely by 12%, oustanding loans up by averagely 11%, and net income up by averagely 12%. Mr. Huynh Phuoc Duy, director of the PCF said: “DI policy helps protect legitimate rights of depositors and enhance their confidence. The State Bank’s and the DIV regional branch cooperate closely in information sharing and facilitating the operation of the PCFs. Capital mobilization and loans therefore met the set target  and promoted the manufacturing and business activities as well as improved the living standard”.

Mr. Nguyen Huu My – Director of Tan Thuan Dong, a PCF which participated in deposit insurance since 2000, pointed out that: “Since being insured, the fund performance has made significant improvement in many ways. As of 2007, the operating fund was 58 billion dongs, of which the total deposit balance was 48 billion dongs, 7 times higher (y-o-y). Over the past years, the DIV has implemented many communication activities to disseminate DI policy in order to improve the public understanding of prudential banking activities and guarantee the confidence in depositing with the PCF”

Moreover, DIV’s supervision and examination has been highly appreciated for timely detecting violations in compliance with the law on deposit insurance. Mr. Nguyen Duong, director of An Long PCF shared that: “DIV’s supervision on local PCFs helps enhance the confidence in the PCF for complying with legal regulation in credit activities. An Long PCF therefore operates stably, attracts idle funds from the public, takes initiative to meet local agricultural manufacturing and business’s demand for credit ”.

The depositors who are also members of local PCFs stated: workshops, training courses to disseminate information held by the DIV, PCFs and the State Bank are opportunities for them to clarify concerns about credit activities. They also serve as the basis for depositing and borrowing for manufacturing. Farmers therefore wish to attend more communication events to access valuable information from the DIV in the future.