Savings help poor households feel secured to get credit

(VBSP News) Along with timely implementation of preferential credit policies of the Government, VBSP Quang Binh district (Ha Giang) is also a leader in mobilizing savings deposits through Savings and Credit groups.

Mr. Hoang Xuan Ky (left), Na Meo village, Tan Nam commune, Quang Binh district raises buffaloes for breeding bought with preferential credit.

Raise awareness of savings

Although the amount of savings mobilized from customers is not large, this activity of VBSP Quang Binh district initially helps people to raise their sense of savings, reduces burden when the loan repayment period is due, and make people feel more confident using loan capital.

Mr. Hoang Xuan Ky, Na Meo village, Tan Nam commune said: “In 2017, my family got a loan of VND 40 million from the VBSP's poor household credit program. I used the loan to invest in livestock. Along with quick disbursement from the bank, I was also instructed to deposit savings through Savings and Credit group. By the end of the term, I had nearly VND 3 million from my savings account to pay loan principal to the bank, so it was less worrying.

According to Mr. Ky, the loan has helped his family to do business, rising out of poverty. Savings were just small amounts from family income each month ... Previously, when the family has not take any loan, they thought savings must be a large sum of money.

Sharing same thought with Mr. Hoang Xuan Ky, many households who borrow preferential loans in VBSP Quang Binh district previously had no daily or monthly small savings. Until the practice of small savings was carried out, interest and principal payment of borrowers become easier. Thereby, it gradually shaped in the mind of people the savings habit, even though it was just VND 100-200 thousand per month.

Mr. Hoang Tien Bo - Head of a Savings and Credit group in  Na Meo Village, Tan Nam Commune said: “The village has 40/46 households borrowing money from VBSP with outstanding loans of VND 1.2 billion, mainly for raising breeding buffalo. Before getting loans, the Group instructed borrowers to make commitments to pay interest in accordance with regulations and deposit savings. Therefore, for the past 2 years, interest collection has been quite convenient and fast, loan is used by the people for the right purpose, bringing about practical effects in poverty reduction.

Dual benefits

According to Mr. Hoang Tien Bo, it has become a habit, every month when VBSP comes to the commune transaction point, most members of the SCG in Na Meo village, Tan Nam commune carries their savings book for savings depositing. Borrowers are mostly poor households, policy beneficiaries, who are living in disadvantaged conditions, thus, those with better living conditions will deposit more. With total savings or more than VND 45 million in the group, in case a member of the group faces difficulties in debt and interest payment to the bank, SCG would use such savings to help members pay debt on due, avoiding overdue debt.

After 10 years of mobilizing savings deposits, Quang Binh district has 220 SCGs with a deposit balance of over VND 6.1 billion; in which, 213 groups ranked well, 7 ranked fairly well in operation. In order to become familiar with savings service, right from the early days, VBSP's staff, collaborated mass organizations and the leaders of SCGs actively help people to understand the purpose, meaning and participate in savings.

The policy of mobilizing savings deposits through SCGs is completely voluntary. In regulations of SCGs in villages, each member should deposit an average of VND 50-100 thousand per month. Savings in the group of borrowers is always reminded to gradually create daily and monthly habits. Seeing the benefits, among 8,356 households borrowing money from VBSP Quang Binh district, the savings rate accounts for 90%.

According to assessment, mobilization of savings deposits through SCGs brings "dual" benefits to both banks and borrowers. Households can make flexible savings deposits in terms of savings amount, helping the poor to form a saving habit. Particularly, the capital mobilized through savings is added to lending capital, giving poor people and policy beneficiaries the opportunity to access capital, create jobs and ensure social security in the district.

Mr. Hoang Xuan Ky, Na Meo hamlet, Tan Nam commune shared: “In fact, people used to have a small amount of income every month through selling three chickens, a couple of pigs or more simply, selling vegetables, fruits in the garden daily and weekly. Since the implementation of VBSP’s savings service, households have consciously retained a few tens of thousands VND to 100-200 thousand VND for savings. At the end of the loan period, the amount of savings along with saving interest can contribute to pay loan principal ... ”.

"In the coming time, we continue to promote communication for people to timely know about credit programs and increase savings deposits. At the same time, closely coordinate with communes, towns, collaborated mass organizations to promote the role of advisers, monitors to improve operation of SCGs ", Deputy Director of VBSP Quang Binh district Nguyen Van Huyen said.

 Moc Lan