Trang Chủ
Along with the mountainous people eradicating hunger and reducing poverty
According to State Bank’s Ha Giang Branch, in 2013, total mobilized capital amounted to 4,500 billion dongs, outstanding credit balance was nearly 9,000 billion dongs and non-performing loans accounted for 0.84% approximately. These achievements were partly attributed to the important role played by DI policy. Specifically, State Bank’s Ha Giang Branch has cooperated closely with PCFs, the local authority to promote awareness of DI through meetings with PCFs, Provincial People’s Council and Provincial Party Executive Committee, thereby creating positive impacts on people’s confidence in depositing money with the credit institutions, boosting up socio-economic development, helping the credit institutions operate robustly to contribute to the safe and sound development of the local banking system.
As a small shopkeeper, Mr. Nguyen Hong Chuong (Ha Giang City) has saved for years. He often chooses the credited PCFs which got operating licenses from the State Bank and take part in DI. According to Mr. Chuong, for those who want to deposit money with a PCF, it is necessary to carefully consider the PCF’s financial capability, service quality, especially DI certification which means if the PCF fails, the Deposit Insurance of Vietnam will reimburse the depositors, thus making them confident. In addition, the mobilized funds are lent to household businesses; thereby contributing to eradicating hunger, reducing poverty and improving local people’s living standard.
The beneficiaries of DI policy are not only the depositors but also small manufacturers like Viet Thanh broom making cooperative in Viet Lam town. Mr. Nguyen Van Mich – manager of Viet Thanh cooperative said the PCF system in general and Viet Lam PCF in particular can be considered as the backbone of business activity of the occupational village, cooperatives through receiving deposits and lending money in the area. He himself and others got totally assured when placing money in the PCF thanks to DI policy and the PCF’s reliability. This, in turn, leads to the easy access of cooperatives to loans which enable them to quickly invest in production and thus, to create jobs for local people. As for Viet Thanh cooperative, it has operated quite stably with revenues increasing every year. The cooperative has employed 300 local workers. These achievements have not only contributed to the local economic development but also to the social and political stability in Vi Xuyen district.
The family of Mrs. Ha Thi Tue (Tay ethnic group) in Vi Xuyen district is a typical example of those households which have escaped from poverty quickly by combining agricultural production with breeding, earned hundreds of million dongs annually. She said some years ago, her family was so impoverished that when her child got sick she had had no money and had to catch crabs to sell, which earned her just 1,500 dongs, not enough to buy medicine for her child. By doing household business, breeding and carpentry with loans from the PCF, her household now has not only escaped from poverty but also saved money with the PCF.
According to Mrs. Tue, saving and borrowing money at the PCF is quite easy as the PCF’s officers tell clients clearly about the procedures, interest rates…As a depositor, she feels absolutely secure about her savings since they are guaranteed by DI policy.
Although DI policy has made positive impacts on socio-economic development in Ha Giang through promoting capital mobilization, hunger eradication and poverty alleviation and restraining the development of black credit, there still remain some problems concerning regulations on DI which need to be resolved, such as: DI coverage limit and premiums.
Hoping the Government raises DI coverage limit
Increasing DI coverage limit will match the socio-economic development and meet the expectations of most depositors. According to Mr. Ninh Quoc Chinh –Director of Bao Tin PCF, most residents of Ha Giang City are small shopkeepers earning good incomes. As shown by statistics the deposits exceeding 50 million dongs at the PCF account for 70%. Therefore, given this fact, the DI coverage limit applied since 2005 is no longer appropriate. In order to stimulate the mobilization of idle capital and strengthening depositors’ confidence in PCFs, it is recommended that the Government should raise the coverage limit up to 200 – 300 millions dongs.
Sharing the same view, Mr. Le Tien Sinh Director of Viet Quang Town PCF highlighted that the 50-million dongs coverage limit is outdated, hampering the capital mobilization of the PCF. As the town has high literacy rate and high average household income, deposits exceeding 50 millions dongs account for 60-70%. Therefore, people are concerned with deposit preference and DI policies. Many owning a deposit of hundreds of millions dongs often have suggestions on increasing the DI coverage limit. According to Mr. Sinh, it is the time for the Government to raise the coverage limit up to about 200 millions dongs.
Creating fair competition among credit institutions by applying risk-based DI premiums
According to regulations, the current premium rate of 0.15% calculated on the total balance of insurable deposits is applied to all insured institutions regardless of their size and ownership form. This is not expected by credit institutions while the financial market is facing numerous hidden risks.
“In the short term, the Government should consider the application of risk-based premiums instead of the current flat rate. Study on the operation of credit institutions in the region shows that the application of the risk-based premium system would enhance the transparency of credit activities and promote the fair competition among credit institutions. Moreover, it would help credit institutions adapt quickly in order to operate more effectively and avoid systemic risks” said Mr. Nguyen Xuan Thinh – Director of State Bank’s Ha Giang Branch.
Agreeing with that, Mr. Hoang The Cuong – manager of Viet Quang Town PDF added that “DI premiums should be based on risks posed to credit institutions or assessment and classification of the credit institutions’ quality so that people feel more assured to pick a suitable one”.
According to Mr. Ninh Quoc Chinh – manager of Bao Tin PCF “the application of the risk-based premium system will create fair competition among credit institutions, encouraging them to operate more effectively and avoid systemic risks. As the direct beneficiaries of DI policy, depositors will have a good chance to assess the performance of credit institutions accurately in order to choose the right ones”
DI policy is the commitment of the Government to best protecting the interests of depositors, contributing to the maintenance of the soundness of credit institutions. The suggestions from grassroots level will form the basis for relevant authorities to adjust or make proper policies in order to meet expectations of local residents as well as local credit institutions.
