Banks stepping up inclusivity with female-based products

Banks are creating more options for women-based banking strategy, photo Le Toan

The International Finance Corporation (IFC) under the World Bank and five world-class investment funds – Banque Internationale de Commerce-BRED, BlueOrchard Microfinance Fund, KASIKORNBANK Pcl, OPEC, and responsAbility Investments AG – have elevated their credit package granted to Hanoi-based lender SeABank, from $150 million in mid-June to $220 million as of now, to facilitate access to financial access for small- and medium-sized enterprises (SME) and women-owned businesses (WSME).

“It has always been a cornerstone of our masterplan to avail SMEs and WSMEs. The increasing involvement of the IFC and other major foreign credit institutions demonstrates SeABank’s renown and effectiveness in drumming up support and keeping faith in the potential of Vietnamese WSMEs,” said Le Thu Thuy, CEO of SeABank.

Thanks to the additional funds, Thuy added, SeABank will be better able to contribute to the expansion of female-owned enterprises, as well as establish gender-sensitive action plans and initiatives in accordance with the bank’s strategic approach.

Last June, the IFC offered a $40-million loan to SeABank, which was the first phase of a $150-million financing package to support local businesses, particularly WSMEs. While the investment aims to increase SeABank’s SME lending portfolio, at least $20 million will be earmarked for WSMEs.

The IFC also advocates SeABank’s establishment of a women’s banking strategy in order to enable SMEs to close a $4.9-billion financing gap, making up more than 20 per cent of the overall financial deficit experienced by SMEs.

The Asian Development Bank (ADB) and Hanoi-headquartered lender TPBank inked a loan agreement worth $25 million last month to boost growth of access to financing for WSMEs in the country.

DEG, Germany’s Deutsche Investitions-und Entwicklungsgesellschaft mbH, has also contributed $25 million to the project.

The loan is backed by a technical assistance award of $750,000, which is envisaged to assist TPBank in better addressing WSME-related obstacles. The grant will be utilised to bolster TPBank’s competence to lend to women-owned businesses and recruit new employees in line with its gender-balance policy.

Besides technological excellence, TPBank targets being a trailblazer in the women-led business landscape, with an ambition to diversify its female borrowers. The grant is funded by the Women Entrepreneurs Finance Initiative (We-Fi).

TPBank, as it claimed, could integrate advanced technology to analyse the underserved WSME sector because of this agreement.

“We are delighted to be working with TPBank and We-Fi to promote WSMEs, which are critical avenues for increasing women’s involvement in the country’s economic growth,” said Suzanne Gaboury, general director of the ADB’s Private Sector Operations Division.

Nguyen Hung, TPBank’s general director said, “TPBank has placed a primary focus on helping Vietnamese women entrepreneurs in their quest for adequate funds.”

Likewise, with assistance from the ADB, SHB has just launched a preferential financing effort for WSMEs to empower women-owned businesses with the goal of assisting them in recovering and stabilising production. The two sides pledged to aid and abet businesswomen in maximising their potential to contribute to the country’s socioeconomic development. The project is scheduled to be completed by the end of 2022.

“Women-owned businesses are progressively making significant contributions to the country’s prosperity,” reiterated Ngo Thu Ha, deputy general director of SHB. “With supportive female entrepreneurial frameworks, we anticipate that this group would make a marked difference in Vietnam’s economic growth.”

ADB also partnered with VPBank to roll out a preferential loan framework to bolster WSMEs capabilities in resuming production operations.

To meet these new borrowing demands – whether they be secured or unsecured – VPBank is offering interest rates as low as 2 per cent per year on a variety of loan products.

OCB, similarly, is also facilitating several preferential mechanisms for WSMEs to narrow gender disparity in the country, with the aim of driving forward an equitable and sustained economic recovery.

The State Bank of Vietnam estimated that women account for over 60 per cent of labour input in banks in Vietnam, but only approximately 20 per cent of top managerial positions. Domestic banks encounter difficulties recruiting and retaining talented professionals, and a shortage of competent female employees may result in more significant labour expenses.

According to the Mastercard Female Entrepreneurs Index 2020 study published in 2021, Vietnam boasted a 26.5 per cent of WSMEs. While the country ranked ninth in terms of the proportion of female leaders among the 58 economies studied, it ranked 44th in the index examining business support conditions, indicating that more initiatives aimed at assisting businesswomen should be implemented.

Notwithstanding, the vast majority of these businesses were micro-sized, with 42 per cent being SMEs and just 1 per cent large corporations. Furthermore, the funds disbursed to women-owned businesses constituted for just around 5 per cent of total loans.

The World Bank highlighted that economies across the globe lost $172 trillion solely in 2020 due to the differences in lifetime earnings between women and men – a significant increase from the $160 trillion that were projected in 2018.