Vietnam - Bank targets students and poor

VietNamNet Bridge – More than VND9 trillion (US$432 million) from the Viet Nam Bank for Social Policies (VBSP) has been injected into society, with priority given to poor households and students, and public utilities in rural areas, according to the bank's deputy general director Nguyen Duc Hai.

The VBSP was established in 2002 to provide credit for the poor and other beneficiaries.

It is regarded as an efficient tool of the Government in mobilising various resources domestically and internationally to perform the Government's designated social-policy lending.

The bank is able to offer loans to the poor and government social-policy beneficiaries through grassroot networks, appropriate infrastructure, and private and public participation, particularly through bonds.

Of the disbursed money, VND3.5 trillion ($168 million) was lent to poor households, VND3 trillion ($144 million) worth of loans to students and pupils, and VND778 billion ($37.3 million) to production and trading enterprises in underprivileged areas.

At least VND776 billion ($37.2 million) was invested in projects involved in clean-water supply and rural sanitation, and VND339 billion ($16.2 million) for employment creation.

Interest rates on these loans are much lower than rates being offered by commercial banks: 10 per cent for loans for clean water and environment projects; 7.8 per cent of loans for poor households, students, and job creation; and between 3 per cent and zero per cent of loans for underprivileged ethnic-minority areas.

After nine years of operation, the bank's lending and debt collections have proceeded smoothly, thanks to appropriate investments, according to Hai.

The bank's current total outstanding loans are VND107.2 trillion ($5.1 billion), of which bad debt accounts for only 1.4 per cent or about VND1.5 trillion ($72 million).

In 2011, the bank lent nearly VND32 trillion ($1.5 billion) and collected debt worth VND2 trillion ($96 million).

In the first five months of this year, VBSP each month collected between VND200 billion ($9.6 million) and 250 billion ($12 million) from due debts.

"The bank's debt collection has not met difficulties since borrowers were well educated about responsibilities to pay the loans back, as they benefit from the government's preferential credit policy," Hai said.

The capital that the bank used for the government's socio-policy lending was mainly raised from bonds issued under a government guarantee, he said.

In 2012, the credit growth target that the Government has set for the VBSP was 10 per cent (equal to VND9,318 billion) compared with last year's figure.

To realise this, the bank was allowed by the Government to issue VND26 trillion ($1.2 billion) worth of bonds this year.

In the last five months, the bank raised VND12,680 billion, ($609 million) nearly half of the target for the year, Hai said.

He said the bank had only met nearly 30 per cent of the people's needs, and that demand was still very high.

"Our top priority still remains with the poor and beneficiaries of government social policies," he added.

VietNamNet/Viet Nam News

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