Streamlining preferential credit flows to those in need

VBSP's transaction offices provide access to those most in need in every commune across the country

For the past 15 years, the commune transaction offices have held a pivotal role in streaming the preferential capital flows to remote villages and areas, helping the poor break away from poverty and achieve better and more fulfilling lives.

Since its establishment in 2002, Vietnam Bank for Social Policies (VBSP) and its divisions have long realised the essential role of the transaction network. Being a social policy bank—a bank for the poor—a network covering only branches and transaction offices at the provincial and district levels was not sufficient. The poor are often located in remote areas that are difficult to access.

VBSP should not wait for local residents to reach them, but take the initiative to reach out to them. For this reason, VBSP chose to set up transaction points incorporating a savings and credit division in each and every commune. This way, preferential funds are easily accessed by locals and remote villagers.

After some 15 years of operations, VBSP has a network of 63 branches in different provinces, 629 transaction offices at the district level, almost 11,000 commune transaction points, and some 200,000 units of savings and credit.

This coverage has served a large number of clients, including 7 million ones with outstanding loans, over 8 million loan accounts, and 6 million savings accounts. Nearly 90 per cent of the clients are living and running small businesses in the rural, remote, and mountainous areas. The commune transaction offices themselves have so far handled over 85 per cent of VBSP’s total transactions.

Once a month, a credit officer visits each commune transaction point to disburse funds, collect interest payments and savings deposits, as well as hand out interest payments, among other related tasks. At the transaction points, preferential lending policies and procedures, with details of eligibility for the programmes, together with the listed interest rates, maximum limit or households whose loans are outstanding are all transparent and accessible. Local villagers thus have clear and sufficient information right at the community where they live, rather than having to travel to VBSP’s district or province-level transaction offices.

VBSP’s commune transaction units also collect comments and suggestions from local villagers, and at the same time, explain, discuss, and guide them in any issues with regards to government and ministry policies and regulations that they may not fully understand.

Thanks to the structure of commune transaction points, officers can get closer to customers, and many bank officers have gained great understanding and established close ties with customers, including households or families in extreme difficulties. As a matter of fact, they have accumulated significant work experience, as well as leveraged their ability and strengths to climb higher on the career ladder.

Do Tu Quyen (35), a young officer working at VBSP’s Mu Cang Chai District Branch in Yen Bai province, for instance, has taken the effort to learn a minority group language so that he would be able to converse and discuss business and listen to local villagers’ thoughts. In 2017, Quyen has been honoured with an exemplary individual award, marking her long way to strive to success.

Mu Cang Chai is known as one of the 64 poorest districts across the nation, with over 91 per cent of the population belonging to the Mong ethnic group. Most of them are illiterate to the level that they do not know how to sign their own name (instead, they are required to simply give their fingerprints), and can only speak their own language. Given such limitations, many of them could not access preferential loan programmes, despite them being in place for a long time. Thanks to officers like Quyen, several issues have been rectified, with many households now able to access capital to settle their living and operate businesses.

Similarly, Nguyen Trung Tan (Nam Dinh) has been working at VBSP’s Muon La District Branch for quite some years. Tan finds great joy in the improvements in the lives of local villagers who have changed their mindset to get a better life and leave behind poverty.

It is not only in Mu Cang Chai or Muong La where positive changes have been witnessed, many other districts and communes in Vietnam have been reached by VBSP officers through their commune transaction points, channelling capital to where the locals need it the most in a quest to wipe out poverty.

So far, the commune transaction offices have played a significant role in enhancing access to preferential government loans, aiding borrowers to reduce time and costs. VBSP’s customers thus can save up to VND150,000-250,000 ($6.80-11.36) per paid working day as they do not have to travel all the way to the VBSP offices in central districts.

With up to 7 million households or borrowers, commune transaction points help save a total of VND1.05 trillion ($47.72 million) this way. This is therefore a great incentive for the bank to get closer to borrowers—a far more meaningful act than discounted interest rates.

Even more, by publicising the use of the preferential capital, the government fund has been used effectively and efficiently. And given the direction of local administration and socio-political organisations, borrowers have also maximised the utility of their loans.

VBSP has grown up to be a state-run credit institution with an extensive network of transaction offices spanning across the entire banking system, acting to ensure all targeted and potential customers can easily access its products and services.