Trang Chủ
Earlier this year, interviewed in the TV program "People ask, Ministers answer", the State Bank of Vietnam (SBV)'s Governor Nguyen Van Binh has asserted that depositing money with banks is the most effective and safest investment channel. So far, the Governor's assertion has remained true. Given quite low consumer price index (CPI) in recent months and the interest rate of 6-7% for 1-year term deposits at commercial banks, depositors still enjoy a positive real interest rate, which ranges from 1.6%-2.6% per year . Even if there are other investment channels, idle money should be placed in banks to avoid the risk of “putting all eggs in one basket”.
In recent years, the banking sector has sometimes experienced bank runs because of rumors, and the dissolution of some credit institutions due to making loss or violating the law. This phenomenon has raised the question of whether bank deposits have potential risks.
First of all, it is obvious that all forms of investment contain risks. However, bank deposits are least risky. Moreover, since 1999 there has been a financial institution established by the Government, working "silently" to protect legal rights and interests of depositors, which is Deposit Insurance of Vietnam (DIV). DIV will, on behalf of the Government, make deposit insurance payments to insured depositors in case of bank failures. So, depositors can be fully assured that their savings are always protected by the Government. In 2012, the National Assembly passed the Law on deposit insurance and this Law took effect on January 1, 2013, which created a transparent legal basis for deposit insurance. formation, DIV will protect depositors through activities such as off-site supervision and on-site examination to detect signs of banks'weaknesses, send warnings to banks and report to SBV on these for solutions. In case a bank becomes insolvent and no longer viable, DIV will help the institution leave the banking sector in an orderly manner without affecting the whole system, and will reimburse depositors. The Law also stipulates that depositors do not have to pay insurance premiums, but rather credit institutions have to.
Clearly, DIV works as a "safety barrier" for the banking system, which helps reduce risks for depositors. At present, the deposit insurance coverage limit is 50 million VND - including both principal and interest - for a client. This level, applied since 2005, is very low though supervision and examination for detecting risk are always considered as the core activity. Reportedly, DIV has proposed the SBV and other agencies concerning adjusting this limit up to 200-300 million VND and even higher in the future in order to keep up with the progress of economic development and to ensure the interests of depositors.
Thus, thanks to the operations of the DIV as well as DIV's collaboration with other relevant agencies, credit institutions, the safety of bank deposits has been increasingly enhanced and bank deposits have become the choice of the majority of people.
