Policy credit helps push back black credit

According to the State Bank, the local banking sector has proactively taken a raft of measures to expand credit serving production and business, and people’s diverse living requirements. This has supplemented the Ministry of Public Securities’ concerted efforts in pushing back black credit.

More than 38 million needy households and other policy beneficiaries received loans from VBSP in the past 18 years

One important factor in the fight against black credit and providing residents with timely capital sources are preferential lending programmes of the Vietnam Bank for Social Policies (VBSP). As of now, aside from commercial credit, VBSP is deploying dozens of concessionary credit programmes to support the production, business, and consumption of needy people, policy beneficiaries, and those from ethnic minorities.

As of September 30, total outstanding balances from policy credit surpassed VND223.207 trillion ($9.7 billion), with nearly 6.5 million needy, near-poor households, and other policy beneficiaries still held the loans. VBSP has been carrying out more than 20 policy credit programmes where credit quality has been put at foremost importance. The rate of non-performing debts is always kept below 1 per cent of the total loan balances (0.7 per cent at present).

Many poor households got access to low-cost capital sources with long-term loans from VBSP branches to develop the household economy. For instance, the three-children family of Bui Van Luc residing in Khoang village, Xuan Thuy commune, Kim Boi district, Hoa Binh province fell on hard times and were among poor households for many years.

In 2012, Luc’s family received access to the capital channel earmarked to support poor households and took a loan of VND20 million ($870) to buy two buffalos in the reproductive stage. After three years, the buffalos enabled his family to cover the expenses of their elder daughter to continue studying at university and pay off the loan.

In 2015, Luc’s family broke out of poverty and took another loan from the capital sources to support near-poor households to grow a fruit orchard. Initially, the orchard did not bring income, meanwhile, his children need a big amount of cash to support learning.

Luc recalled, “I once thought of turning elsewhere for money to cover the children’s learning. Luckily, I was advised to fill in procedures to take on loans tailored to support needy pupils and students living in hardships.” Thanks to the lending scheme, Luc’s children now have stable jobs after finishing their studies.

As of now, Luc continues taking loans from VBSP’s branch office to develop his longan garden which has now reached 3ha, while in the meantime teaching his fellow villagers how to grow longan, creating the famous Xuan Thuy longan brand.

Like many other families having access to VBSP loans, Luc has recognised the advantage of the bank’s capital sources in supporting needy people. Luc wishes more and more needy people in rural areas to get access to the bank’s useful capital sources, thus avoiding taking on risks when turning to black credit.

From a poor household having to struggle for subsistence, now the family of Quach Thi Nhung in Thao Ca village, Vinh Tien commune, Kim Boi district, Hoa Binh now has seven cow heads, contracting a pond to raise more than 30,000 seafood breeds and grown more than 1ha of grapefruits.

VBSP's social policy credit has contributed to pushing up the national target programme on sustainable poverty reduction

With additional incomes each month, her children have good conditions for learning and a better life. Nhung has expressed deep gratitude towards VBSP support that has helped her family and many others to develop economy and manage a better future.

In the past months, VBSP has worked out numerous measures on credit expansion serving production and business while simultaneously pushing back black credit, such as raising the loan limit to VND100 million ($4,350) per household without collateral or raising loan durations to at most 120 months for needy, near-poor households, and those who have just freshly escaped from poverty. The bank is also doing a good job of managing credit quality and improving policy communication activities.

According to Tran Lan Phuong, VBSP deputy general director, as of September 30, policy credit is now divided into two principal groups. The first group consists of credit programmes serving production, business, and creating jobs with 14 programmes which reported VND165 trillion ($7.17 billion) in total outstanding balance, accounting for 74 per cent.

The beneficiaries are poor, near-poor households and those recently-escaped from poverty, production, and trading households and traders in areas difficult for economic development, labourers going to work abroad under term-contracts, small- and medium-sized businesses, and more.

The second group consists of credit programmes feeding consumer demands for housing, learning, fresh water, and environmental sanitation in rural areas with six programmes that reported VND58 trillion ($2.5 billion) in total balance, accounting for 26 per cent in total. The beneficiaries include needy pupils and students.

In the past 18 years, more than 38 million needy households and other policy beneficiaries received loans from VBSP. Policy credit has reached all communes, wards, and districts across the country, with priority given to communes where ethnic minority people are living, rural and remote areas, borders and islands, helping more than 5.8 million households escape poverty and creating jobs to nearly 4.3 million labourers.

VBSP concessionary loans also helped more than 129,000 labourers in the families of policy beneficiaries go abroad to work, nearly 3.7 million pupils and students living in difficulties to continue studying, building over 13.7 million clean water and environmental sanitation works, and nearly 731,000 gratitude houses for needy people and policy beneficiaries.

Social policy credit has contributed to pushing up the national target programme on sustainable poverty reduction, building new rural areas, creating more jobs, ensuring social well-being, social order, and security in localities and beefing up national economic development under the slogan of “Not letting anyone behind”, from there lending a hand to push back shark loans in the countryside.