Trang Chủ
Types of small credit institutions in Vietnam include people's credit funds (PCFs) and microfinance institutions (MFIs). Currently, Deposit Insurance of Vietnam (DIV) is protecting depositors at 1,181 PCFs and 4 MFIs.
Small credit institutions, by providing credit, savings, insurance, other financial services and non-financial services, not only help the poor to access formal financial services but also create jobs, production and business, contribute to help poor people reduce risks in life and increase income.
In recent years, the Government has paid attention to and invested in many methods, including amending policies and laws in order to create all favorable conditions and encourage small credit institutions to operate more efficiently and safely. Specially, in 2005, the promulgation of Decree No.28/2005/ND-CP on the organization and operation of small financial institutions in Vietnam marked the official recognition of MFIs by the Government. Then, on November 15, 2007, the Government issued Decree No.165/2007/ND-CP amending and supplementing a number of articles of Decree No.28/2005/ND-CP in order to create a suitable legal corridor for the operation activities of MFIs. Notably, the Law on Credit Institutions 2010 has overcome the basic shortcomings of the Law on Credit Institutions 1997, which is the official recognization of MFIs as one type of credit institutions. This is considered a step forward, creating a solid legal foundation for the consolidation and stable development of MFIs in the national financial system.
Aware of the development scale of this type of credit institution, since the establishment of DIV, PCFs have been the type of credit institutions that are required to participate in deposit insurance. For MFIs, the Law on Deposit Insurance and Decree No.68/2013/ND-CP stipulate and guide in details: "MFIs must participate in deposit insurance for deposits of individuals, including voluntary deposits of microfinance customers, except for compulsory savings deposits as prescribed by the MFIs". Thus, like other credit institutions, the interests of depositors at MFIs are also protected, giving these organizations a competitive advantage in providing convenient savings products to mobilize and expand capital size.
Over the past time, DIV has implemented a timely deposit insurance policy to small credit institutions through ma activities such as: granting and withdrawing the Certificate of participation in deposit insurance; off-site supervision, on-site examination and handling of weak PCFs; disseminate deposit insurance policies… ensuring synchronous and drastic compliance with the provisions of the law.
Accordingly, on the basis of increasing the deposit insurance coverage limit to VND 125 million under Decision No.32/2021/QD-TTg of the Prime Minister, which took effective from December 12, 2021, the DIV has completed 100% of granting Certificate of deposit insurance participation under the new coverage limit to 1,282 insured institutions (including 97 banks and foreign bank branches, 1,181 people's credit funds, 1 cooperative bank and 4 microfinance institutions) and issued 12,282 copies of the Certificate of participation in the deposit insurance to the insured institution. The implementation ensures the accuracy and completeness of information in accordance with the law and the regulation on issuance and revocation of the Certificate of deposit insurance participation, serving well the supervision activities, improving depositors' confidence in the deposit insurance policy.
For the examination at small credit institutions, there are many potential risks. The DIV has determined that deposit insurance policy communication is an important operation that needs to be promoted. In rural and remote areas, where people and depositors have little access to information, special attention is needed. Aware of that, the DIV has applied two-way communication policy on deposit insurance, helping small credit institutions to understand clearly about the coverage limit, deposit insurance premium, the scope of insured deposits. At the same time, DIV can listen to small credit institutions’ voices, give opinions and suggestions on policies as well as professional activities of DIV. Thereby, the DIV can receive, respond, and explain the deposit insurance policy to these areas not only helps to strengthen public confidence, promote the development of small credit institutions in particular and the system of credit institutions in general, but also contributes to opening up capital flows for local economic development, making an important contribution to the implementation of policies on agriculture, rural areas and farmers.
Although the policy and development orientation of small credit institutions has been established for a long time, there are still many shortcomings in the activities of these organizations still have potential risks, the inverse ratio between development scale and sustainability, especially for the PCF system. Besides, the process of formalizing MFIs is still slow. Up to now, MFIs operate under two forms: licensed MFIs (converted into official MFIs) and unlicensed MFIs (semi-formal MFIs or microfinance programs and projects). Currently, there are only 4 MFIs licensed to operate under the Law on Credit Institutions, the remaining are more than 30 organizations participating in microfinance activities across Vietnam.
In order for DIV to continue to perform well its role in implementing deposit insurance policies for small credit institutions, it is necessary to strengthen close coordination with relevant agencies such as the State Bank of Vietnam (SBV), especially SBV branches in the provinces and cities in providing and exchanging information related to the granting of establishment and operation licenses for smal credit institutions; perfecting mechanisms and policies for MFIs; strengthening the examination and supervision of credit institutions in general and small credit institutions in particular to ensure the comprehensive implementation of the provisions of the law on deposit insurance.
With the effective implementation of the deposit insurance policy over the past time, DIV has shown its relentless efforts in implementing the deposit insurance policy. At the same time, from practical operations, DIV has been contributing ideas and proposing solutions to ensure that the deposit insurance policy always goes hand in hand with the development of credit institutions; making an important contribution to the process of implementing the scheme on restructuring the credit institution system; ensuring the legitimate rights and interests of depositors at these small-sized credit institutions.
