Policy credit: An efficient capital channel

In the past five years, the authorised capital amount entrusted to the Vietnam Farmers’ Union to lend to its members rose constantly from VND42.623 trillion ($1.85 billion) by the end of 2014 to VND67.442 trillion ($2.93 billion) by August 31, up 58.23 per cent.

This accounted for 30.58 per cent of the total outstanding balance the Vietnam Bank for Social Policies (VBSP) has lent to people in need through the authorised model with support from diverse political and social organisations.

The information came from a recent online conference in Hanoi, reviewing lending to needy households and other policy beneficiaries via the authorised format by VBSP in 2015-2020.

VBSP general director Duong Quyet Thang making remarks at the recent online conference reviewing policy credit activities

These policy credit activities have helped the Vietnam Women’s Union and its members tackle difficulties and challenges they face in operation processes such as creating employment and helping members to push up business and production or mitigate climate change and pandemic implications.

In the past five years, the Union has contributed to improving the capacity and sense of responsibility of the staff directly working on capital lending at all levels, including supporting borrowers in properly using the loans to ensure repayment.

Along with this, with support from the Union, more than 40,000 training courses were organised, focusing on capital disbursement skills and processes, capital source management, as well as new procedures and regulations on authorised capital activities, among others.

In fact, the Vietnam Women’s Union has been the top performer with the highest outstanding balance among the country’s political and social organisations with authorised capital sources from VBSP.

As of August 31, the Union’s capital volume surpassed VND85.36 trillion ($3.7 billion), an increase of VND33.8 trillion ($1.47 billion) compared to 2014. Overdue debts dropped to 0.21 per cent, down 0.13 per cent compared to the end of 2014, showing that the members have basically fulfilled their loan obligations.

The capital provided to the Union has been vital in bringing policy capital to women in need and the bank has done an outstanding job in controlling these capital sources to ensure the money is used in the right way, helping needy households escape poverty.

In light of Directive No.40-CT/TW of the Secretariat dated November 2014 on strengthening the Party’s leadership in policy credit distributed by VBSP and related political and social organisations continue to effectively handle their lending activities to people in need, helping to realise the national targets for sustainable poverty reduction, building new countryside model, and ensuring social well-being, drawing widespread appreciation from the people and the community.

By the end of August 2020, the total outstanding balance under the authorised model at VBSP reached VND220.545 trillion ($9.6 billion), making up 99.56 per cent of the bank’s total balance, an increase of VND90.491 trillion ($3.93 billion) compared to 2014, growing an average 11.8 per cent per year, with a network of 173,712 capital lending and savings groups, and nearly 6.5 million members still incurring loans.

Credit quality has been constantly improving, with the ratio of overdue debts to the total outstanding balance entrusted to relevant political and social organisations falling from 0.38 per cent in 2014 and 0.25 per cent by the end of August.

Concessionary credit has been lent quickly and conveniently to the right people with the total lending volume under the authorised format hitting VND334.061 trillion ($14.5 billion) in the past five years, accounting for 98.8 per cent of VBSP’s total balance, with more than 12 million recipients.

Important capital channel

Nguyen Lam, Deputy Head of the Central Commission for Mass Mobilisation, said that through the authorised capital format, political and social organisations have been winning growing trust from the people. This lending method has become not only an efficient capital channel but is also proving an innovative model in public relations activities.

More importantly, policy credit has been contributing to enhancing people’s spiritual and material lives, consolidating solidarity in the nation, and fostering people’s trust in the renovation cause of the Party and the state.

In the time ahead, Duong Quyet Thang, VBSP’s general director and member of the Board of Directors said, “In the coming time, lending through the authorised model will remain an important capital channel to reach the policy credit target and will be developed in a sustainable manner, providing the best support for needy households and other policy beneficiaries.”

The participants joining the online conference

The target is for all needy households and other policy beneficiaries to be able to access VBSP’s credit programmes and services.

“In the past years, the political and social organisations partnering with VBSP have been very dedicated to their job, bringing success to the policy credit programme and garnering appreciation from the Party, the state, and international organisations. We are committed to furthering this success story,” added Thang.