VBSP-key player of promoting financial inclusion in Vietnam with 77% market share.

(VBSP News) VBSP was established by the Government in 2003. As of May 30^th, 2017, total capital of VBSP was over VND 176,000 billion; total outstanding loans were over VND 164,000 billion. At present, VBSP serves approximately 6.9 million customers, nearly 80% of whom living in rural, remote and mountainous areas.

VBSP identifies financial inclusion as an important development direction to achieve its goal of providing quality, convenient services to customers who are mainly the poor and the policy beneficiaries. In the past few years, VBSP has taken the necessary steps to promote financial inclusion in the bank’s customer community in particular and in Vietnam in general.

A meeting of a Savings and Credit group

Increase outreach by expanding the network and partnering with partners

After 15 years of operation, VBSP has expanded its network to all communes, with 63 provincial branches, 629 district transaction offices, nearly 11,000 commune transaction points and nearly 200,000 Savings and Credit group (SCGs).

Transactions at commune transaction points cover over 85% of the total transaction value of customers with VBSP, contributing to enhance access to preferential credit services of the Government for the poor and policy beneficiaries; reducing transaction costs of the borrower; Exercising democracy, publicize the use of policy credit funding and enhance the direction of local administrations and socio-political organizations in monitoring, supervising and assisting borrowers to use capital effectively.

In addition, in order to reach customers at the villages, VBSP collaborated with mass organizations to set up and manage the Savings and Credit groups. This is a collection of poor, near poor households and other policy beneficiaries who have demand for loans from VBSP for production, business, job creation and livelihood improvement. The group members also provide mutual assistance in production, business and life and supervise each other in borrowing, using loans and repaying the bank.

Thanks to the extensive network, it can be said that VBSP is the bank with largest outreach in the banking system in Vietnam, ensuring that all potential customers can easily access the bank's services.

Enhance financial education to partners and customers

A credit officer of VBSP providing guidance on loan procedures to customers

VBSP pays much attention in providing financial education for partners and the Savings and Credit groups so that they can re-train and direct the borrowers. The training program covers knowledge and skills in the management of credit and savings programs and other potential financial services such as micro-insurance and other services , business and social capacity building.

For customers, VBSP is also actively supporting customers through activities such as financial education for customers, cooperating with local agricultural, forestry and fishery extension agencies to provide technical assistance in doing business and production.

Design products suitable for customer

With vulnerable customers mainly in rural and disadvantaged areas who find it difficult to get loans from commercial banks, VBSP has developed many credit products to meet the needs of people. At present, VBSP is providing more than 30 loan programs for various beneficiaries and demands such as loans for the poor, the near poor, people who have just escaped from poverty, clean water supply for rural environmental sanitation, loans for disadvantaged students, loans for production and business in difficult areas, loans for labor export etc,.

In addition to credit products, savings products are also designed specifically for the poor and policy beneficiaries. It is the saving product for the poor who join SCGs. Group leaders take deposits from team members, usually small amounts, then monthly or quarterly deposit to VBSP staff at the commune transaction points on the commune transaction date as regulated. Members can use savings to pay debts, interest to VBSP or withdraw when necessary.

From 2016, VBSP also receive savings at commune transaction points. Any citizen with full civil capacity can choose to send money at commune transaction points instead of going to any bank office far from where they live. The product offers convenience to customers living far from urban centers.

Apply digital finance technology

To improve access to financial services of customers, especially the poor, people in rural, remote and remote areas where bank branch opening is expensive while often conduct only small transactions, VBSP has implemented the project "Mobile banking services" expected to be implemented from 2017-2019.

The project will start with the sending of information to customers through SMS messages such as repayment schedules, debt reminders and monthly account balances. By doing so, VBSP will improve transparency and efficiency, reduce the rate of overdue debt and provide timely information to customers. Then, VBSP will pilot mobile banking services for leaders of SCGs and customers to automate the banking transaction process expand services on mobile platforms to meet customers' needs such as money transfer, savings, bill payment, and insurance. This enables customers to access comprehensive financial services while improving credit quality and cost effectiveness for both clients and VBSP. The project started in urban and suburban areas and gradually expanded to rural and remote areas nationwide.

Enhance customer protection

VBSP minimizes the risk that borrowers, who are mostly poor and disadvantaged people due to limited access to information, can be easily abused by those involved in the lending process, by applying strict procedures and process to provide clients with the best services, ensuring that clients are protected according to international practices.

VBSP loan programs are subject to preferential interest rates, lower than market interest rates to reduce financial hardship for the poor and policy beneficiaries. In addition, VBSP's lending, debt collection, interest collection, savings deposit, etc. are provided in a convenient manner and completely free at commune transaction points instead of at the VBSP offices to save time and travel expenses for poor households and policy beneficiaries. Commune transaction schedules are fixed on a publicized fixed date for customer to remember easily and for people to implement and monitor.

Lending process, procedures, interest rates and deposit interest rates are all publicly available at commune transaction points, VBSP offices at all levels and at the VBSP website. The list of clients approved for loans is also posted publicly at the commune transaction points to ensure transparency, clarity to the customer.

In addition, for convenience to customers, VBSP mandates interest collection through SCGs so that people do not have to spend time traveling to the bank monthly. But for the loan principal, to avoid risk, VBSP clearly stipulates that the borrower must pay principal directly at VBSP’s offices of commune transaction points.

For customers who are facing objective risks and not yet be able to pay debts, VBSP applies policies on debt rescheduling, loan extension and debt freezing in order to create favorable conditions for customers to maintain their production and business to get earnings for repayment. For those who cannot pay due debts due to objective reasons such as borrower's death, disappearance, loss of civil act capacity without any heir or the heir is completely incapable of repayment, VBSP shall cooperate with SCG’s Board of Management, mass organisations at commune level to review and propose the Government for writing off.

VBSP also provides official channels of communication with customers so that customers can give feedback on quality of service and get answers for their personal inquiries. Currently, 100% of VBSP’s offices at all levels and commune transaction points have hotline, mailbox receiving direct feedback from customers. In addition, the website of VBSP (http://vbsp.org.vn) also has a section for questions and answers to customers.

By step by step mainstreaming financial inclusion to its operation, VBSP is moving towards a customer-friendly approach that effectively addresses basic financial needs of the poor and policy beneficiaries, helping them to improve production and business, thus, improve the quality of life./.