Roll out savings for the poor

Savings for the poor is implemented by VBSP nationwide resulting from the pilot savings product for the poor and low-income households funded by the Ford Foundation in Hoa Binh, Gia Lai and Hai Phong provinces. The savings service is now mobilized under the Decision No.244/NHCSXH-KH dated February 18th, 2009 by VBSP’s General Director.

The characteristics of VBSP’s savings product aims to response to the demand of the poor and low- income households based on voluntary savings. As committed oneself to the convention of the savings and credit groups, the group members can deposit or withdraw their savings according to their demand. 

Based on the written agreement among members in the group, the group’s leader receives savings deposit from members monthly. When receiving savings from members, the leader or representative of the group’s management board who are assigned by the group’s leader shall count, check and journalize the amount of savings deposit into a group saving book.  When members need to withdraw their savings or use savings for paying loan interest for VBSP, members should inform the group leaders in advance the amount of savings that they want to withdraw. The group leaders will consider for paying based on members’ balance of savings deposits. The bank will calculate and pay interest on June 30^th and December 31^styearly or when it closes savings accounts under the add-on interest method on the savings book of the group.  The time for calculating interest: from the date that the group leader deposits savings to VBSP. On the transaction dates of January and July yearly, when group leaders come to transaction points, the bank shall base on the amount of savings balance with added interest on savings cards (kept at the bank) to journalize the amount of money including interest added to principal in the savings book of the group, and at the same time sending to group leaders the enumeration of calculating periodical interest added to principal. So that group leaders can journalize the interest into the savings monitoring forms of members.

Until now, the VBSP’s savings product has been proved to be necessary and effective with the following advantages:

- Security: VBSP mobilizes savings from the poor through the entrusted credit and saving groups on the basis of accuracy, security and prestige. Its solvency is guaranteed by the Government. Savings deposits can be used as capital resource for lending to the members of  the credit and saving groups  with the bank’s regulation.

-  Easily accessing, low transaction costs: All transactions that depositors have to do will be done with their group leaders at their local areas so that it creates comfortable transactions with low cost when depositing as well as drawing savings.

- Depositors can deposit or withdraw their savings according to their demand. Although, group leaders have transactions with the bank at the fixed date monthly,when members need to withdraw their savings or use savings for paying interest of loan for VBSP in interval, there’s still available cash for transaction .  

- Savings deposit is accepted to be at least VND 1,000 that makes favorable condition for the poor and low-income households.

VBSP has been deploying the new savings service in February 2009. Among the total 189,047 savings and credit groups nationwide, there have been 142,739 groups eligible for mobilizing savings deposit. 99,194 of those are now implementing savings service. The total balance of savings deposit has reached VND 344,539,458,610 at the end of September 2010. Approximately there are three million poor households depositing their savings through groups. Besides, VBSP’s savings product has helped the poor gradually be aware of savings practices and improved the capacity of managing transactions with customers and the bank for savings and credit groups’ leaders.

Apart from continuously improving the quality of savings service, VBSP has also broadcasted publicly its service through printing posters, leaflets, documents and making video clips for communicating and training savings service. And at the same time, VBSP has composed and issuing the guiding manual for group leaders so that they can manage the operation of the groups effectively as regulation and also it helps to improve the management capacity of group leaders.

It can be said that VBSP’s savings product has really brought about efficiency and played important role for both the bank and its customers. Thanks to this product, VBSP has strengthened capacity for its staffs, groups’ leaders as well as improved the poor’s awareness of savings in particular and financial services in general, effectively making contribution to the Government’s poverty reduction program. 

                                                                                           Phan Ha