Illustrative image (Photo: VNA)Hanoi (VNA) – How to ensure financial sustainabilityand long-term financial services for the poor at the same time remains aheadache for both policy makers and financial service suppliers.
This issues was discussed at a workshop entitled “Pro-poorRural and Agriculture Finance Best Practices: Experiences of Vietnam” held bythe Vietnam Bank for Social Policies (VBSP), the Asia-Pacific Rural andAgriculture Credit Association and the International Fund for AgricultureDevelopment in Hanoi on September 5.
Dao Minh Tu, Deputy Governor of the State Bank of Vietnam(SBV), told the workshop that the Party, the Government and the banking sectorhave always paid special attention to finance for farming areas in Vietnam.
Under the national target programme on sustainable povertyreduction, the VBSP was assigned to provide credit for poor households andsocial assistance beneficiaries.
In addition, the Government and the SBV have directedpreferential credit programmes for agriculture and countryside areas indomestic credit institutions, he said.
Since 2006, credit programmes of the banking sector foragriculture, rural areas and the poor have been a key part of Vietnam’s povertyreduction policies.
“Therefore, the credit from the banking sector and othersources has helped Vietnam achieve the Millennium Development Goals (MDGs) inhunger elimination and poverty reduction in 2002, 13 years earlier than the target,”Tu said.
Over the years, the SBV has instructed credit institutionsto balance their capital to meet the demand of farming, and regulate interestrate ceilings on short-term loans to priority sectors. The interest iscurrently at 6.5 percent per annum, 1 to 2 percent lower than the generalinterest rate.
The SBV has advised the Government on the issuance of creditsupport programmes for agriculture and rural development.
It has also directed credit institutions to implementprogrammes, polices and credit products to boost access to bank capital forpeople working in agriculture and rural development.
As a result, credit outstanding for agriculture and ruralareas has increased by an annual average of 20 percent, higher than the overallcredit growth of the economy, Tu said. Agricultural and countryside creditprogrammes have aided agricultural and rural development and farmers’ livingstandards.
Credit institutions have diversified banking products andservices for farmers. Notably, the poor in remote areas have had opportunitiesto access financial products and services at a reasonable cost.
The VBSP has provided 20 credit programmes for agricultureand countryside areas, including lending for the poor and near poor, accordingto the bank. In the first half of this year, the bank’s total outstanding loansstood at 181.8 trillion VND (7.75 billion USD), 90 percent for agriculture andthe rural areas.
Tran Huu Y, director of the training centre of the VBSP,said the bank’s development strategy by 2020 approved by the Prime Minister hasset forth orientations that firstly target customers’ financial sustainability.
Duong Quyet Thang, VBSP General Director, said the bank hascontributed to reducing poverty, improving farmers’ living standards, narrowingincome gap and raising the poor’s awareness of saving.
However, Deputy General Director of the Vietnam Bank forAgriculture and Rural Development (Agribank) Nguyen Thi Phuong said investmentin rural agriculture has been limited and not met demand. Private investmenthas been small, with few enterprises operating in the agricultural sector, mostof which are small-scale.
In addition, agricultural production is often affected bynatural disasters, climate, diseases, environmental pollution and climatechange.
Agribank has proposed increased investment in farming,especially from the State budget, for infrastructure, science and technology aswell as input products.
In addition, the ability of credit organisations providingfinancial services for non-urban areas should be strengthened to ensure safety,efficiency and responsibility in operation, especially for VBSP and Agribankwhich are major loan providers for agriculture and rural areas.
Nguyen Quoc Hung, head of the Credit Department under theSBV, said the central bank will continue to identify agricultural and ruralareas as priorities, adding that it will use monetary policy management toolsto provide capital support for credit institutions in order to increase loansin service of agriculture and rural areas.
At the same time, the bank will instruct credit institutionsto step up administrative reforms, simplify lending procedures, and diversifyproducts and services in an effort to increase the access to loans of customersin the field of agriculture and rural areas, he said.-VNA
VNA
