Nguyen Van Ly
Deputy CEO at Vietnam Bank of Social Policies
VBSP has been changing the lives of poor families by providing them access to microfinancing, helping them to take the first step out of poverty. What has VBSP done to ensure that you have sufficient capital for these microfinance projects?
In 2017, the bank has handed out microfinance to more than 2.1 million poor families and other disadvantaged people in Vietntam. About 400,000 households have managed to escape poverty, 210,000 people found jobs, and 62,000 students were granted tuition loans. There have also been 1.2 million projects that provide clean water and public hygiene in rural areas and 41,000 houses for poor families.
By the end of 2017, outstanding loans at VBSP reached VND172 trillion ($7.5 billion), increasing by VND15 trillion ($658 million) on-year. More than 6.7 million households are currently our borrowers. VBSP has disbursed 80 per cent of the additional capital amongn poor families, as well as financed clean water and public hygiene projects.
Our microfinance capital has reached 100 per cent of localities around Vietnam, with a focus on areas that are remote or ravaged by natural disasters. After the recent floods, VBSP has provided an additional VND300 billion ($13.2 million) to help poor communities to rebuild their homes and recover their business as quickly as possible.
Like you said, it is absolutely necessary that our capital is adequate for loan programmes. There are three ways for us to do this: first, we can issue bonds according to approved plans. Second, we can take 2 per cent of deposits from state-owned banks. Third, we can also take in deposits from corporations and individuals.
Besides, VBSP also suggested local authorities, as well as investors from Vietnam and overseas, to transfer trust money to us for microfinance projects. We are also trying our best to collect payments from borrowers.
VBSP has carried out great projects so far. But how about the quality of these projects? Can you share more about your collaborations with the local authorities?
We have always prioritised improving our credit quality. Overdue debts only take up 0.41 per cent of our outstanding loans, which is the lowest in the entire banking system. The process of checking borrowers’ repayment ability is taken very seriously, and we are proud to say that our capital for poor families and other disadvantaged people has been utilised very efficiently.
We are also in close collaboration with the local authorities, shown through our vast system of 10,974 transaction points at the local people’s committees' offices. At these transaction offices, local residents can look at what programmes are available, how the process looks like, and the list of current borrowers in the neighbourhood. The borrowers and depositors deal with VBSP directly, witnessed by the local authorities. All of these transactions are carried out in one window, just like at any commercial bank.
In 2017, transactions at these points take up 85 per cent of our activities, showing that the system has been very active.
What are the highlights of your 15 years of activities, since your incorporation in 2002?
This year, we have organised a seminar to commemorate our 15th anniversary. Throughout the past 15 years, we have worked tirelessly to carry out microfinance projects, lifting the lives of millions of poor families and helping eradicate poverty in Vietnam.
Our success shows that the Vietnamese government, from the central government to local authorities, always pays close attention to helping poor families and other disadvantaged people, focusing on raising funds to make sure that everyone gets sufficient funding to improve their lives. The microfinance system has worked well in the Vietnamese environment, as evidenced by our achievements in the past 15 years.
A secret to success is strong collaboration with the local authorities, who act as supervisors and trustees in various microfinance programmes. The transaction point system also makes sure that people can access VBSP anytime and the local authorities can easily monitor lending activities.
Moving forward, what strategy will VBSP pursue in the next years?
VBSP will continue its growth in a sustainable manner, helping poor people and other disadvantaged people overcome poverty and improving rural communities. We will introduce new products and services to suit the changing needs of depositors and borrowers, apply technology into our system and train our personnel. VBSP staff have to understand local residents, what they need and how they can realise their dreams with our funding.
To diversify our sources of funding, VBSP will continue to attract private capital from corporations, individuals, and organisations from Vietnam and overseas. We will also raise donations as bonuses to our capital sources.
In 2018, VBSP aspires to expand its lending by at least 8.5 per cent, fulfilling goals set out by the government. Its focus will be on poor families and other disadvantaged people, especially those living in remote or disaster-prone areas. The bank’s lending will go in line with Vietnam’s national strategy on eradicating poverty and building modern rural communities.
Our guides will be Decree No.100/2015/ND-CP on social housing loans and Decision No.2085/QD-TTg on lending to ethnic communities in mountainous areas.
The bank will continue diversifying its capital sources by attracting deposits from corporations and individuals, as well as ensuring timely repayments. The transaction point system will be improved, with the processes simplified but still adequate to ensure the high quality of credit. New products will be introduced to serve the changing needs of depositors and borrowers.
VBSP staff and the local authorities will continue to receive hands-on training. The bank will also promote its programmes to the local authorities and communities across Vietnam.