Press Release: VBSP contributes for poverty reduction and social security in Vietnam

(VBSP News) To give all viewers better understanding on the preferential credit initiative of the Government, VBSP has collaborated with the Youth Newspaper to hold an online conversation on "Preferential Credit for Social Security".

                Guests participate in the online conversation

The guests participating in the conversation includes: Director of Department for managing and handling non-performing loans - Ms. Nguyen Thi Lieu; Director of Capital Planning - Mr. Pham Anh Duc; Deputy Director of Credit for the poor - Mr. Dang Duc Thang; Deputy Director of Department of Credit to the Disadvantaged Students and Other Target Groups Ms. Pham Kim Nhuan.

Through this online conversation, VBSP would like to provide readers nationwide with more understanding on the role of preferential credit for social security, current loan programs and policies so that residents can borrow loans in compliance with prevailing regulations.

Hereinafter are some questions and answers of guests who were invited to the conversation:

 Director of Department for managing and handling non-performing loans answers questions raised

Khanh Huyen, a reader in Ha Giang province, asked: VBSP has timely supported poor households who have cows and buffaloes dead due to the extensively severe cold and snow in early 2016. Could you tell me the support level and procedures for poor households? Is this policy conducted regularly?

Director of Department for managing and handling non-performing loans: VBSP will conduct debt resettlement pursuant to the loss level of borrowers, such as: loan extension, frozen debt from 3 to 5 years.

Regarding the procedures, borrowers who suffer from damages due to objective reasons shall prepare a request on risky debt resettlement and coordinate with VBSP and other related organizations to check and set up a minute on identifying the damage in terms of capitals and assets. VBSP conducts risky resettlement as stipulated.

Phuong Anh who is living in Ho Chi Minh City, asked: Which measures does VBSP implement to respond with the borrowing demand of households who have just escaped poverty?

Director of Capital Planning: VBSP conducts many comprehensive measures to respond with the borrowing demand of poor households, near poor households and newly escaped from poverty households, as follows:

Regarding the capital mobilization measure, VBSP mobilizes deposits from state-owned commercial banks; issues bonds guaranteed by the government; mobilizes deposits from individuals and organizations in the market, especially savings deposit from members of savings and credit groups.

Deputy Director of Credit for the poor joined the conversation

Phuong Anh, in Ho Chi Minh, asked: How does VBSP implement loan extension and overdue debt conversion for debts of households just escaped from poverty?

Deputy Director of Credit for the poor: Regarding loan extension, if borrowers does not repay debts due to objective reasons in the final loan repayment term and have demand for loan extension, they must prepare the loan extension request 5 days prior to final repayment maturity and submit to the bank for considering loan extension (Form No.09/TD).

The bank allows loan extension once or several times but the maximum extension period shall not beyond the loan term recorded on the loan book for a 12-month loan and is not beyond a half of loan term for an over-12-month loan. Regarding overdue debt conversion, it is as follows:

- Borrowers use loans for wrong purpose.

- Borrowers who are not approved for loan extension in the final loan repayment term.

Deputy Director of Credit to the Disadvantaged Students and Other Target Groups answered readers’ questions

Khanh Huyen, in Ha Giang, asked: How does VBSP monitor and supervise borrowers in order to ensure the effectiveness of preferential loans? What is the role of savings & credit groups and mass organizations?

Deputy Director of credit for the poor: VBSP collaborates with mass organizations in the lending process such as communicate on preferential credit programs, urge borrowers to repay on time and supervise loan utilization .

Mass organizations coordinate with People’s Committee and village leaders at commune level to communicate and implement credit programs to households and participate in witnessing assessment on eligible borrowers, loan size and borrowing purpose etc. in order to ensure democracy, transparency and right beneficiaries. 

VBSP collaborates with mass organizations to monitor and supervise activities of savings and credit groups (SCGs) in compliance with the VBSP’s BOD regulation, urge the SCG’s leaders to supervise loan use, help VBSP collect interests and deposits of SCG’s members based on agreement with VBSP.

SCG is recognized as a bridge for VBSP to reach borrowers. SCGs are established in hamlets, villages and are agreed by communal People’s committee to operate according the VBSP’s regulation.

SCG Management Board will introduce the policy credit programs, lending procedures to policy beneficiaries, collaborate with VBSP to implement the programs, give guidance to group members to complete the lending procedure, receive loan application form, hold the group meeting to publicly elect eligible applicants among members, require group members to utilize loan for committed purpose, pay interest and principal on due time. SCG Management Board is also entrusted to collect interest and savings from its members under the entrust contract signed with VBSP and has monthly transaction with VBSP at the commune transaction point. 

For more effective and efficient implementation of policy credit to the poor and policy beneficiaries, SCG is required to: (i) effectively hold the meeting to publicly elect the eligible borrowers, publicize loan size, loan term, borrowing purposes etc,. under the supervision and monitoring of the village head and representatives of commune mass organizations; (ii) Actively participate in supervision and monitoring of loan utilization, outstanding loans, outstanding savings of its members in collaboration with relevant agencies; (iii) Directly supervise the loan utilization, business and production, income and debt repayment of its members. Promptly report to VBSP and local authority about members who use loan for wrong purposes or move to other commune, and other relevant information affecting group operation and credit quality; (iv) Strictly and effectively hold regular group meetings and monthly collect interest and savings from members to timely update the situation of each member, help members to become aware of paying debt and gradually improve the loan utilization of group members.

 Mr. Pham Anh Duc-Director of Capital Planning Department (on left side) at the online conversation

Quang Cong in Son La asked: if the disadvantaged students join in the army after graduation, how will they pay debt?

Deputy Director of the Credit Department for Disadvantaged students and other policy beneficiaries: if the disadvantaged students join in the army after graduation, they will pay debt under the following procedure:

Firstly, the outstanding amount will be extended for longer term and they do not have to pay interest for the period of military service but not exceeding 24 months since the date of military mobilization.

The duration of military service is counted from the date stated in the command of military mobilization to the date of army demobilization (the effective date of Decision of army demobilization).

- To enjoy the policy for the disadvantaged students joining in the army after graduation, the borrower is required to prepare the following documents:

+ After the disadvantaged students join in the army, the borrower will send VBSP a notarized copy of the enlisting command. Based upon the command, VBSP branch considers and checks out the legality and invalidity of the documents, states in the Borrowing Book (both the book kept by the borrower and the book kept by VBSP) that “Temporarily do not collect the principal and interest during the military service of disadvantaged student” on the page of the lending program to disadvantaged students. 

+ After the military demobilization, the borrower sends VBSP a notarized copy of relevant documents certifying the army service of the disadvantaged students as followings regulated:

In case of army demobilization, the borrower sends VBSP branch a copy of the Decision of military demobilization. Based upon the date of the command of military mobilization and the effective date of the Decision of military demobilization, VBSP will determine the army service duration of the disadvantaged student.

In case the disadvantaged student is recruited by the Ministry of Defense or recruited as the professional military officer, the borrower sends the copy of the Decision of the Military Agencies. The borrower then has to pay interest and principal since the date of recruitment.

- If the disadvantaged student in the military service whose loan is extended can pay the debt before the due time and still enjoy the policy of interest reduction as regulated.

Phuong Anh in Ho Chi Minh city asked: What are the interest rate, lending procedure and loan term of the lending program for rural water supply and sanitation?

Deputy Director of Credit Department for disadvantaged students and other policy beneficiaries: Under the Decision No. 750/QD-TTg dated 01 June 2015 of the Prime Minister on interest rate adjustment of some policy credit programs, the interest rate of RWSS program is down to 0.75% per month (equivalent to 9% per year).

Under the implementation of RWSS program, VBSP directly provides loan to program beneficiaries and entrust some steps in lending procedure for the mass organizations and through Savings and credit groups.

The specific loan term is determined based upon the existing funding and payment capacity of the borrower, but not exceed 60 months including six-month grace.

Duy Phu in Ho Chi Minh city asked: The Prime Minister approved 8% growth rate of outstanding loans for VBSP in 2016. Could you tell us VBSP detailed plan to arrange timely funding for production and business of the poor?

Director of Capital Planning Department: Thank you for your question. VBSP is tasked to strictly follow Resolutions of the Government, Directives of the Governor of State Bank and Resolutions of the Board of Directors; closely collaborate with relevant agencies, authorities and socio-political organizations; strongly govern and implement effectively and systematically the solutions to mobilize fund to satisfy the demand on policy credit of the poor and other policy beneficiaries.

At the receipt of the Decision on VBSP assigned growth rate of outstanding loans in 2016 by the Prime Minister, VBSP has advised the Board of Directors to balance the funding for policy credit programs, make the funding plan and assign the targets for branches at the beginning of the year.

In addition, VBSP also concentrates on mobilizing funds to successfully reach the assigned growth rate of outstanding loans, directing branches in the whole system to reinforce the human resources to complete the documents, promptly disburse money to implement policy credit programs for the poor, near-poor and “newly escape from poverty” households and other policy beneficiaries as legislated. VBSP also strengthens the supervision and monitoring on whole system operation to channel policy lending to targeted groups.

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