The "compass" for policy credit

	Mobilizing resources for policy credit
	Credit growth remains far from government’s target
	Banks actively sell secured assets but still find it difficult to "close orders"

(Photo) Conference scene

To facilitate the development of the summarizing project for Directive No. 40-CT/TW, on July 2, the Central Economic Commission collaborated with the National Academy of Politics Ho Chi Minh City and the Vietnam Bank for Social Policies (VBSP) to organize a scientific conference titled "Orientation, tasks, and solutions to continue strengthening the Party's leadership over VBSP credit in the new context."

According to Nguyen Hong Son, Deputy Head of the Central Economic Commission, VBSP credit represents an innovative, profoundly humane solution that aligns well with Vietnam’s real-life socio-economic objectives. It contributes significantly to goals such as rapid and sustainable poverty reduction, job creation, and human resources development...

However, the international context continues to evolve rapidly, with strong, complex, and unpredictable changes accompanied by new trends like the digital economy and green economy, which significantly impact the economy. Therefore, the Deputy Head believes that these issues introduce new requirements for VBSP credit activities, necessitating fresh viewpoints and innovative solutions to enhance the quality of these activities.

At the conference, the Party Committee of the Ministry of Finance reported that from an initial capital of only 7,105 billion VND received from the Agriculture and Rural Development Bank, Vietnam Industrial and Commercial Bank, and the State Treasury, the total capital of the VBSP has reached 373,101 billion VND over 21 years (as of April 30, 2024), more than 52.5 times its initial amount at inception; the total outstanding loans for policy credit programs stood at 346,198 billion VND, accounting for 93% of the total capital.

Since its establishment, the policy credit funds from the VBSP have supported nearly 6.8 million households to rise above the poverty line; generated employment for over 6.9 million workers; enabled nearly 4 million students in difficult circumstances to obtain educational loans; and constructed over 19 million clean water and environmental sanitation facilities in rural areas; and provided nearly 610,000 homes for impoverished households and families benefiting from policy initiatives...

To ensure adequate capital for implementing policy credit programs, the National Assembly, the Government, ministries, central agencies, and local governments at all levels consistently focus on mobilizing and channeling resources to enhance the financial and operational capacity of the VBSP. This is achieved through methods such as allocating state budget funds for statutory capital, subsidizing interest rate differentials and management fees, and providing capital for policy credit programs based on the Decrees and Decisions of the Prime Minister. Regulations also require state-owned financial institutions to maintain a deposit balance equal to 2% of the capital mobilization balance in Vietnamese dong as of December 31 of the previous year; mechanisms are in place to allow the issuance of government-guaranteed bonds and to enable the VBSP to borrow some preferential capital sources...

Mr. Duong Quyet Thang, Board Member and General Director of the VBSP, emphasized that the VBSP credit model is unique to Vietnam. The bank also implements lending at "negative" interest rates, where there are instances of mobilizing interest at 12% per year but lending at only 6% per year. Additionally, the bank operates a model that is close to the people, by the people, and for the people, minimizing costs for citizens and ensuring rapid deployment of the policy support package.

Yet, according to experts, there remain some limitations, difficulties, and bottlenecks such as insufficient attention by some party committees and governments to VBSP credit activities. Some credit policies have low borrowing limits, are slow to adjust, and do not meet the investment needs and actual market price trends. The quality of credit is not uniform across regions and localities. The resources for implementing VBSP credit programs have not met the demand; the capital structure is not truly reasonable nor sustainable. The integration and coordination between socio-economic programs and projects with VBSP credit are not effective.

Therefore, Prof. Dr. Le Thi Thanh Tam from the Banking and Finance Institute, National Economics University, proposed that to enhance operational capacity, the VBSP needs to strengthen digital transformation to reach customers more quickly at lower costs while improving service quality.

On the same issue, Dr. Nguyen Tu Anh, Director of the Center for Information, Analysis, and Economic Forecast at the Central Economic Commission, believes that in the future, the lending network must be expanded to be able to reach those in the "core" poor population, while also encouraging the near-poor population to achieve sustainable poverty alleviation. Therefore, the leadership of the Party needs to be intensified to mobilize the full strength of all stakeholders.