Vietnam gives lessons in the protection of bank depositors
Vietnam gives lessons in the protection of bank depositors
Depositor protection, or deposit insurance, is a very important system and has a strong role to play in protecting the assets of large groups.
“Banks and financial institutions are considered to be small entities, whereas depositors or clients are considered to be large groups,” said the Deputy Governor of the Bank of the Lao PDR (BOL), Mr Sonexay Sithphaxay.
“So it's important to understand that if a large group of people has a problem of some kind, all people will be heavily impacted, along with the political system and administration.”
Mr Sonexay was speaking at a seminar in Vientiane on Friday titled “Legal Framework of Deposit Insurance System - Vietnam Experience”.
The seminar enabled participants to understand how the depositor protection system works; they also learnt about the real life experiences of Vietnam.
Acting General Director of the Depositor Protection Fund, Mr Santy Phonmeuanglao, said that more than 100 countries currently have a deposit insurance system in operation.
“We know that deposit insurance and associated services are expanding around the world; it is important because it directly concerns the assets of depositors,” Mr Santy said.
Mr Sonexay said “We will have to move faster on the development of this scheme and improve matters quickly if we see there's a problem. We need to ensure the system is in place to avoid a difficult situation in the future.”
General Director of the Deposit Insurance of Vietnam, Mr Bui Khac Son, said 2008 saw the world's worst financial crisis, which affected banks, other financial institutions and economic development worldwide.
“International deposit insurance systems have played an important role in redeeming and restoring banks and financial institutions that were almost forced to close. But now they are financially sound again and are continuing their business as before.”
The Depositor Protection Fund of Laos and the Deposit Insurance of Vietnam have been working together since the Fund was established in 1999. The Fund now has 21 members, comprising local and foreign banks and financial institutions.
The Depositor Protection Fund will pay compensation to a depositor in a commercial bank in Laos in the event that it fails, thereby building public confidence. It also insures deposits made at commercial banks operating in Laos, according to BOL's website.
The Fund is a state-owned enterprise and as an entity is entitled to insure deposits for compensation payment instead of member bank s up to an amount determined by the Fund in the event of failure or similar incident at a member bank.
vientiane times
