VBSP: Perform administrative procedures for financial inclusion

(VBSP News) Vietnam’s Government has officially introduced at the beginning of the year 2007 the Project on Administration Procedure Reform in the fields of state management for the period 2007-2010 (referred to as Project 30). Project 30 performs three phases: (i) data and process review; (ii) proposed solutions to administrative procedure reform; and (iii) Impact of approved solutions to administrative procedure reform.

In line with Project 30 under the management of the Prime Minister, VBSP has made the data and process review on all procedures managed by VBSP and proposed the solutions to simply the procedures on the way to become more simple, convenient, applicable and effective and efficient. VBSP uploaded a set of all procedures managed by VBSP applicable to individuals and organizations on the website on 14^th August 2009. The next phases of Project 30 are actively and constructively performed by VBSP.  

The replacing of the former credit and savings book and issuing of the interest receipts

 VBSP is a non-profit bank and works as a tool of the Government to implement policy credit to the poor and other policy beneficiaries for production and business development, improvement of living standards. VBSP’s customers are almost the most vulnerable groups in the society who lack of assets, knowledge and opportunities for development. For this reason, VBSP always has strong determination to simplify the lending procedures and cut the cost at maximum since the first days of its operation. During seven years of operation, VBSP has performed the operation in parallel with the innovation and step by step simplification of the administrative procedures based upon the rising difficulties and problems during its operation as well as the feedback from its customers.

VBSP has taken over three policy lending programs in the establishment year 2003 and now has performed 18 lending programs. VBSP has the operation network nationwide, some 200,000 credit and savings groups and more than 9,500 fixed-date transaction points at commune for direct access to policy beneficiaries. For VBSP special characteristics and more and more lending programs deployed, VBSP has studied and worked out the consistent and combined lending process and lending procedures on the way to ensure the convenience for the borrowers as well as the effective and efficient implementation.

Noticeably VBSP replaced the former credit and savings passbook with the newly-designed one and issued the printed receipts of interest in 2009, which is remarked as a milestone in administrative procedure reform.  

In the past, different lending programs required different lending procedures (different loan application forms). In addition, the borrower was required to prepare two original copies of loan application, one submitted to VBSP and one kept by him. If a household is eligible to borrow money from three different lending programs, he may have to prepare three different forms and keep the copy of three loan applications. While VBSP target groups mostly are the poor and other policy beneficiaries who usually do not realize the importance of keeping the copies of lending documents, which causes trouble in management of lending documents. For this reason, many households can not supervise effectively their outstanding loans at the Bank, even they do not know exactly the total borrowed amount, the due date, the interest payable monthly to the leaders of CSG. With the newly-designed credit passbook, the information on loan term, loan size, interest rate etc,. of all lending programs of one household are all presented in one passbook. The lending documents only include the newly-designed credit passbook and one-page loan application form fulfilled by the borrower. The newly-designed credit passbook sweeps out the existing troubles and facilitates the borrowers with the simple and transparent lending procedures.

Additionally the newly-designed credit passbook is considered an useful tool for VBSP staff to supervise and manage more closely and easily the lending funds and the lending documents. It is also recognized as the good chance for VBSP and mass organizations to review the lent sources, find out and handle the faults, abuses, as well as the cases of duplicate lending by one household from one lending program (different members in one household received money from the same lending program).

 As of 31 December 2009, the former credit and savings books were successfully replaced with the newly-designed credit books for 5,741,000 households of 5,041,000 households (representing 96.6%), which makes the reduction of 641,500 turns of households in comparison with the number in the past. 1,296 cases of abuse  of funds were founded and handled promptly.  

The issuing of the printed receipts of interest which is known as a scientific approach facilitates the management board of CSG to actively collect the monthly interest payable and to establish confidence and credibility of the customers in the way they pay back the interest. This innovation enables VBSP’s operation more transparent and clear, improves the effectiveness and efficiency of loan collection, and equips the customers with full information on their interest payment.

Administrative procedure reform is in parallel line with the poverty alleviation process of VBSP. Hence VBSP has  actively performed the administrative procedure reform before the deployment of Project 30; has seriously and performed the reform under Project 30; and commits the continuous and further reform in the coming time on the way to bring the funds to the customers under an easy, convenient and effective and efficient approach.