Protecting depositors through pay-out

More than a year after the dissolution of Tru Huu PCF, local people still have faith in PCF system. “We are and will be depositing our money for earning interests. Thanks to the Party, the Government and the DIV, we have no fear of loosing money at all”, said Ms. Tran Thi Ngoc in Binh Noi hamlet, Tru Huu commune, Luc Ngan district, Bac Giang Province.

According to Mr. Vu Tat Son, Vice Chairman of the Communal People’s Committee cum Vice Chairman of Liquidation Committee for Tru Huu  PCF,  “at first, when hearing about the dissolution of the PCF, many people panicked and only when getting their money back, did they feel totally assured again. The effective and timely deposit insurance pay-out has met the expectation of the depositors, dispersed worries among people, stopped the danger of contagion to the whole system and maintained the stability of  PCF’s operation in the area, thereby restoring and consolidating public confidence”.

Besides playing a role as the direct protector of depositors by making timely insurance payment, through risk supervision (off-site supervision and on-site examination), the DIV has also delivered early warnings in coordination with State Bank - Bac Giang branch so as to help local insured institutions to reduce risk and run stably, thus contributing to safeguarding depositors indirectly. Talking about the role of the deposit insurer, Mr. Nguyen Van Oanh, Vice director of State Bank- Bac Giang branch has asserted that the DIV is an important contributor to maintaining the safety and soundness of credit institutions, ensuring  the interests of depositors by pay-out when a credit institution fails, enhancing public confidence in financial institutions, protecting against bank runs and thus, sustaining social security in the locality. Over the last years, coordination and information sharing between the DIV and State Bank- Bac Giang branch have always been implemented effectively. The enactment of the Law on deposit insurance has formed a firm legal framework, contributing to raising the effectiveness of deposit insurance and banking activities as well as significantly increasing public confidence, stressed Mr. Oanh. In order for the Law to work, relevant authorities should promptly issue documents providing detailed guidelines on implementation of the Law.

Most of recommendations related to deposit insurance by local depositors, authorities and State Bank- Bac Giang branch called on the Government to increase the coverage limit of VND 50 million as currently stipulated so as to better protect interests of depositors and contribute to stability of the local credit activities.