Press Release: Diversified fund mobilization for social housing program

(VBSP News) VBSP can mobilize savings deposits of households and individuals in the country wishing to purchase or lease-purchase social housing for these people to borrow with preferential interest and long- term duration after a certain time of savings.

Preferential lending program for purchase or lease-purchase of social housing; new construction or renovation, repair of residential houses implemented by VBSP following Law on Housing No. 65/2014/ QH13 dated 11/25/2014 of the National Assembly and the Government's Decree No. 100/2015/ND-CP dated 20/10/2015 of the Government. Accordingly, after the lauching of Circular No. 20/2016/TT-BXD dated 30/06/2016 of the Ministry of Construction guiding some contents of Decree No. 100/2015/ND-CP, VBSP issued the guidance No. 2526/NHCS -TDSV dated 27/7/2016 for implementation of the program starting on 15/08/2016. The guidance is written according to the provisions of Decree, Circular, Law of the Government, Parliament, Ministry of Construction, the State Bank and other involved applicable legal provisions.

 Regulating borrowers to deposit savings

 Pursuant to Point 2, Article 74 of the Housing Law No. 65/2014/QH13 stipulates: "VBSP can mobilize savings deposits of households and individuals in the country wishing to purchase or lease-purchase social housing for these people to borrow with preferential interest and long- term duration after a certain time of savings."

 And at Point 5, Article 13, Chapter III of Decree 100 / ND-CP stipulates: "Customers which are households and individuals taking preferential loans from VBSP shall have to make monthly savings deposit at VBSP with minimum duration of 12 months and amount as prescribed by the lender.”

 Compliance with legal requirements as above, in the guidance of VBSP, one of the conditions for borrowing from social housing program in VBSP - “borrowers must make monthly savings deposit at VBSP in a minimum of 12 months from the date of signing the Credit agreement with VBSP. Minimum monthly savings must equal to monthly repayment of the loan”- aims to create more fund for the program. This is an entirely consistent policy in the context of lacking funding for the program.

 Besides, when borrowing from VBSP, the borrowers do not have to repay principal during the grace period of 12 months from the date of first loan installment disbursement. This is one of the differences when borrowing from social housing programs in VBSP and borrowing from commercial banks.

 A look at other savings model of social housing programs abroad

 Housing savings bank of Bausparkasse Schwabisch Hall AG (BSH) in German is the leading bank in the world regarding housing savings . Currently, BSH has branches in many countries around the world such as Slovakia, the Czech Republic, Hungary, Romania and in parts of China ... When drafting the legal provisions of the Law on Housing and Decree 100, ministries and agencies have taken experiences from this bank to adapt to Vietnam context.

 BSH bank is not permitted to mobilize fund and conduct credit activities in financial market. The bank can only receive savings deposit and provide housing loans to such depositors. According to this model, funding of BSH is from contribution of customers’ savings through Savings Contract. Customers having demands for housing in the future shall make agreement with BSH on savings amount and shall make monthly saving deposit with fixed interest rate. As having at least 50% value of the house to be purchased, customers can borrow the remaining 50% with low and fixed interest rate as in the siged Savings contract.

 For effective implementation of the program

 Currently, funding to implement the preferential social housing program through VBSP is the matter of care. For effective implementation of the program, funding cannot depend solely on savings of borrowers but should rely mainly on capital from the Government. It is expected that Government and relevant Ministries shall allocate funding for VBSP to deploy the program, which effectively facilitate the poor, low income people and policy beneficiaries in accessing to social housing, thus, improve their livings. 

VBSP News