Lending to the poor

http://eng.vbsp.org.vn/media/lib/pdftrichovayhnghofinal.pdf

Lending to poor households In compliance with Document No. 316/NHCS-KH dated May 02, 2003 providing guidance on lending to poor households.

* Lending purposes:

- VBSP provides loans to poor households for the purposes of business production, life improvement which contributes to the implementation of National Target Program on Hunger Elimination, Poverty Alleviation and Employment.

* Loan principles:

- Using the loan properly as stated in loan purpose.

- Having obligations to repay (principal and interest) fully on time.

* Borrowing conditions:

- Being permanent residents or having registered long-term residence at location of the lender.

- Being in the list of poor households of local commune, district and town

- The borrower is not required for collateral and is exempted from borrowing fee but must be a member of savings and credit group, must be selected by the group and named in the list proposed to get loan with certification of local  people’s committee.

- The owner of the households or the authorized person to deal with transaction is the person representing the family to take all responsibility in all transaction with Lender, is the person to sign the loan agreement and to make repayment to the Bank.

* Loan utilization:

- Poor households shall use the loan for business, production and services to generate income, and escape poverty.

- For payment of expenses as: electricity, clean water, house repairment, and some of essential needs for education.

* Loan terms:

- Short-term loans: up to 12 months.

- Medium-term loans: From 12 months to 60 months.

- Long-term loans: over 60 months

* Lending interest rate:

- Lending interest rate: 6.6%/year

- Overdue debt interest rates: 130% of lending interest rate

 * Loan size:

- Maximum loan amount is 100 million/household.

* Rights and obligations of borrowers and VBSP:

+ Borrowers:

- Having rights to make early repayment and decline any VBSP’s requirements that are not in accordance with the regulations herein.

-  Having obligations to repay (principal and interest) fully on time.

+ The lender:

- Having rights to reject loan applications which are not in accordance with the regulations herein and to request borrowers to make early repayment if any capital misuse is noted.

- Being responsible for storing loan dossiers.