Policy credit aids the fight against COVID-19

The government’s policy credit has become a motivating force helping needy and underprivileged people to rise up in life

Deputy director of VBSP’s Hanoi branch Pham Van Quyet shared that as the bank’s customers are mostly needy households and policy beneficiaries, they are the most vulnerable to pandemic or other emergencies.

The COVID-19 pandemic has been leaving huge impacts on both people and businesses, casting a big dent on families’ income sources. One it is brought under control, people will be able to return to production and trading, but the capital issue will be one of their biggest concerns.

Taking lending to support people to restore production and trading during the pandemic as its main task, right after the city’s leadership assigned VBSP's Hanoi branch to disburse a VND500 billion ($21.74 million) bailout package among affected people, the bank has been working with local management bodies to ensure capital would find its way to the right people in time.

Albeit the loan limit is set at VND50 million ($2,170) for two years, it has proved efficient in supporting affected people to rebound.

Do Thi Mai Huong, a 38-year old resident of Hanoi’s suburban Soc Son district, has lost her job a little after COVID-19 broke out. She decided to stay at home and raise poultry and cattle. A timely loan from VBSP Hanoi branch helped her buy more cattle for breeding and improve her life on the long term.

Sound steps in development

At its inception, VBSP deployed three credit programmes earmarked for needy households, supporting job creation, and education for disadvantaged students.

In its first years of operation, the bank had proposed a raft of measures to replenish capital sources, gradually calling for support from the whole political system and the society to materialise the national programme on poverty reduction to enhance social well-being.

By 2010, VBSP had deployed 18 credit programmes rooted in its three initial credit programmes. The programmes aimed to improve the life of the part of population with lower than average living standards and realise the government’s target for balanced socio-economic development.

In its 2011-2020 economic development strategy, new challenges to the poverty reduction cause highlighted the need to take stronger steps in policy credit.

Accordingly, VBSP’s development strategy focused not only on efficiently supporting the government’s poverty reduction cause but also contributing to the implementation of the National Socioeconomic Development Strategy for 2010-2020 as well as the national target programme on building new rural areas.

VBSP has bridged the whole political system and society by implementing social credit policy, with an eminent example being the introduction of Directive 40-CT/TW of the Politburo on strengthening Party’s leadership towards policy credit with VBSP consultation.

The sustainability of capital sources and financial strength of VBSP was significantly enhanced from 2017 when for the first time the bank received capital allocation deducted from the state budget's medium-term investment plan for 2016-2020.

Impressive figures

According to Duong Quyet Thang, VBSP general director, as of September 20, 2021 the total outstanding balance of policy credit programmes reached VND242.3 trillion ($10.53 billion), VND16.1 trillion ($700 million) more than at the end of 2020, committed to over 6.4 million needy households and other policy beneficiaries.

The balance from the credit programmes assigned by the PM came to VND207.2 trillion ($9 billion), fulfilling 82 per cent of the year’s plan.

Notably, right after the government deployed policies to support pandemic-hit people, VBSP has instructed its whole system to disburse capital for 921 employers with a total sum reaching VND462 billion ($20.1 million) to pay salary to about 130,990 labourers.

In addition, in the first nine months of 2021, the VBSP system lent out VND61.23 trillion ($2.66 billion) to more than 1.5 million needy households and other policy beneficiaries.

VBSP’s credit sources have timely supported production and business rebound efforts, helping to create jobs for nearly 337,000 labourers and nearly 16,700 pupils and students in difficult conditions to continue studying with loans.

In addition, over 1.1 million clean water supply and latrine facilities in rural areas, 5,200 gratitude houses, flood-resilient houses and social housings were built with VBSP funding.

Even as the balance of policy credit programmes has been constantly growing, debt quality remains stable. Overdue debt and frozen debt volume accounts for 0.7 per cent of the total balance, with overdue debts only making up 0.25 per cent.

While lauding the bank’s achievements, Nguyen Thi Hong, State Bank Governor cum chairwoman of VBSP, noted that in the later months of 2021 apart from its current plans, VBSP needs to continue close cooperation with local governments and other social and political organisations to present timely support to needy households and other policy beneficiaries to ensure stability in production and business.

“The Board of Management at VBSP will need to pass further measures to support expatriate labourers post-pandemic,” Hong said.