Trang Chủ
The common point of the Financial Inclusion Strategy and the Deposit Insurance Development Strategy
The concept of financial inclusion is defined in many different aspects. According to World Bank (2018), financial inclusion is defined as the ability for individuals and businesses to access useful and affordable financial products and services to meet their needs. According to Leyshon & Thrift (1996), financial inclusion is the process by which poor and disadvantaged social groups and individuals have access to the formal financial system. Although there are many different definitions of financial inclusion, most studies have a consensus on the goals of financial inclusion, Hannig and Jansen (2010) and Garcia (2016) both have the same view on the goal of financial inclusion, which is attracting individuals and groups of social organizations that do not use banking services to participate in the formal financial system, where they can access financial services including credit, savings, payments, insurance, etc.
The United Nations identifies financial inclusion as an important solution to achieve 7 out of 17 sustainable development goals by 2030. The G20 group identifies financial inclusion as one of the main pillars in the development orientation. ASEAN countries also identified financial inclusion as one of the three pillars for the ASEAN 2025 vision and established the Working Committee on Financial Inclusion in 2016 with the goal of collaborating to promote financial inclusion in ASEAN member countries and regionwide. Till now, more than 80 countries around the world have been implementing national financial inclusion strategies.
In Vietnam, on January 22, 2020, the Prime Minister signed Decision No. 149/QD-TTg on promulgating the National Financial Inclusion Strategy to 2025, with orientation to 2030. The strategy sets the general goal that all people and businesses can safely and conveniently access and use financial products and services up to their demand, at reasonable costs, delivered responsibly and sustainably by licensed organizations; striving by the end of 2025 to have at least 80% of adults who have transaction accounts at banks or other authorized organizations; progressing toward the goal of every adult having at least one transaction account at a bank or other authorized institution by 2030; at least 50% of the total communes have financial service provision points; at least 25 - 30% of adults have deposit savings at credit institutions; the number of non-cash payment transactions increase by 20 - 25% annually.
According to Governor of the State Bank of Vietnam (SBV) - Mrs Nguyen Thi Hong, the National Financial Inclusion Strategy to 2025, with orientation to 2030 will cover all people, especially those in agricultural, rural, remote and isolated areas. The target audience is ordinary people facing difficulties, the poor or small and medium enterprises. It is also an area that creates huge jobs for people and women - who both manage family expenses and are borrowers of capital to serve production and business for life. The National Financial Inclusion Strategy to 2025, with orientation to 2030 has proposed a group of solutions to protect financial consumers, including financial education, improving financial capacity and knowledge; financial consumer protection. Thereby, the Strategy aims to promote access and use of financial products and services for all people and businesses, with the focus on people living in rural, remote and isolated areas; poor, low-income people, women and other disadvantaged groups. This is also the audience that the deposit insurance policy communication is aimed at.
The Action program to implement the Deposit Insurance Development Strategy states that the DIV actively coordinates with the Communication department of SBV, press and media units to promote deposit insurance policy. The goal of the deposit insurance policy as well as the mission of the deposit insurer is to protect the legitimate rights and interests of depositors - financial consumers in the economy. When depositors have knowledge and trust in financial institutions, financial transactions will be promoted and people are encouraged to save money.
Thus, the National Financial Inclusion Strategy and the Deposit Insurance Development Strategy both aim to protect all people, especially the majority of depositors in rural and remote areas. It can be said that the deposit insurance policy and the DIV have contributed to promoting national financial inclusion.
The role of DIV in promoting financial inclusion in Vietnam
According to the Core Principles for effective deposit insurance system of the International Association of Deposit Insurers (IADI, 2014), the deposit insurance organization protects the interests of depositors through four main operations: Communicating deposit insurance policy to raise public awareness, supervision and examination, participation in special control, reimbursement. Thus, the deposit insurer contributes to promoting financial inclusion by strengthening depositors' trust in financial institutions and contributing to ensuring the safety of the financial and banking system, thereby encouraging people to save more. However, the research on the role of the deposit insurance organization in promoting financial inclusion (IADI, 2013) shows that the relationship between these two factors is only at indirect level.
Factors affect financial users related to financial inclusion include knowledge about financial products and trust. Lack of trust will become a serious problem if countries do not supervise or do not manage financial institutions well, or do not have or have insufficient information through financial consumer protection programs.
Raising public awareness is one of the four main professional activities of the deposit insurer (IADI, 2014) to protect depositors, which contributes to enhancing depositors' trust in the financial system and at the same time improving knowledge of their benefits, encouraging them to use formal and legal financial services, thereby contribute to promote financial inclusion. The deposit insurance development strategy to 2025, with orientation to 2030 sets the goal of having 45% and 55% of depositors grasping the core contents of the deposit insurance policy by 2025 and 2030. Accordingly, DIV has developed and implemented a Communication Project to 2025, with orientation to 2030, which specifically communicates and disseminates deposit insurance policy through many channels and mass media to enhance depositors’ awareness.
Communication of deposit insurance policy
Over the past time, DIV has always been active in communicating and raising public awareness, specifically: DIV actively disseminates official information on new policies and regulations on finance - banking sector in general as well as policies and activities of domestic and international deposit insurers in particular through a series of channels such as the website, newsletter; reputable news and press channels such as VTV, VOV, Vietnam News Agency, Banking Times, Banking Magazine, etc. In particular, regional branches of DIV regularly organize events to spread deposit insurance policies at many locations in provinces/cities across the country. These communication events are aimed at depositors at People's Credit Funds, officials at insured institutions, students at universities who are financial service users and future depositors.
Off-site supervision, on-site examination
DIV protects the legitimate rights and interests of depositors through the implementation of specialized deposit insurance operations such as: regular supervision and periodic examination to detect and recommend the SBV to promptly handle violations of regulations on deposit insurance and safety in banking operations.
Up to now, DIV has focused on synchronously and effectively implementing professional activities according to functions and tasks in an effort to contribute to the overall achievements of the banking industry. Currently, DIV protects more than 110 million depositors at 1,179 insured institutions (including 96 banks and foreign bank branches, 1,178 People's Credit Funds (PCFs), 01 cooperative bank and 04 microfinance institutions). DIV and regional branches across the country continue to carry out 100% regular supervision, periodically examine insured institutions according to the plans assigned by DIV and the SBV, and strengthen supervision to detect and early warn insured institution which are at risk, causing insecurity in the banking system.
Participation in special control
Regarding the legal framework, the Deposit Insurance Development Strategy to 2025, with orientation to 2030 mentions increasing the participation of the DIV in resolving weak credit institutions such as proposing measures, solutions to handle weak credit institutions. Most recently, the amended and supplemented Law on Credit Institutions (2024) more clearly stipulates the tasks and roles of DIV to participate more effectively in the process of restructuring credit institutions, serving as a basis for DIV to contribute part in maintaining the stability of credit institutions, ensuring the safe and healthy development of banking activities. Specifically, DIV participates in evaluating the feasibility of two specially controlled measures to restructure PCFs, including a recovery plan and a plan to merge, consolidate, and transfer all capital contributions; special loans according to the provisions of law on deposit insurance in cases insured institutions have mass withdrawals.
Reimbursement
In the event that DIV's obligation to reimburse deposit insurance arises for insured institution, DIV will perform the deposit insurance reimbursement operation for insured depositors. According to Decision No.32/2021/QD-TTg on deposit insurance coverage limit, the maximum amount paid by the deposit insurer for all insured deposits according to the provisions of the Law on Deposit Insurance (including principal and interest) per person at an insured institution when the obligation to reimburse deposit insurance arises is 125 million VND. The amount exceeding the coverage limit will be paid during the liquidation of that financial institution's assets. According to statistics from DIV, the coverage limit of 125 million VND can fully protect about 90% of depositors (2021). However, recently, the amended and supplemented Law on Credit Institutions (2024) has updated the deposit insurance coverage limit for depositors, up to the maximum amount of the insured individual's deposit at a credit institution (decided by the Prime Minister). Thanks to this, the interests of depositors will be better protected, through which depositors will be more proactive in financial transactions, contributing to promoting financial inclusion.
Currently, the maximum term for reimburesement of deposit insurance is 60 days from the date the insurance reimbursement obligation arises. Based on current practice and capacity, the Deposit Insurance Development Strategy to 2025, with orientation to 2030 sets out the goal of shortening the actual payment time from the time the reimbursement obligation arises down to 30 working days in 2025 and 15 working days in 2030, so that depositors' rights are always guaranteed quickly and accurately.
It can be said that DIV has protected the legitimate rights and interests of depositors, and also protected financial consumers - the subject and focus of the National Financial Inclusion Strategy through concretizing deposit insurance policy, synchronously deploying professional methods to strengthen depositors' confidence in the financial system, raising financial awareness, thereby promoting national financial inclusion.
DIV concentrates resources to promote financial inclusion
DIV coordinates closely with the SBV and relevant ministries, departments and branches to effectively deploy financial inclusion in correlation with finance - banking and deposit insurance policies.
In addition, DIV is continuing to do research and build a legal framework, especially the upcoming revised Law in deposit insurance to meet the innovation of modern financial and banking activities.
DIV has been proactively improved the effectiveness of the communication policy; actively changed and diversified communication forms and communication channels to appropriate audiences. In addition, proactively coordinate with PCFs and microfinance institutions to organize communication programs and disseminate policies to depositors local people. In particular, focus on implementing and evaluating the effectiveness of periodic communication activities through surveys.
Along with that, DIV continues to actively share and learn international experiences and practices in adjusting deposit insurance coverage limit and types of insured deposits to meet the practical requirements of banking and financial market.
Communication department
