Credit fund system to consolidate for development

Although there were certain difficulties, over the first 6 months of 2019, credit fund system in the province still grew stably, contributed to economic development, job creation, and poverty reduction in their areas.

Primary targets grow well

Over the first 6 months of 2019, together with other credit institutions, 10 credit funds continued to grow steadily. Accordingly, operations and activities of the 10 credit funds in 38 wards and communes with 18,565 members maintained a good growth rate and developed according to guidelines. In particular, credit funds developed in accordance with orientations, achieved transition objectives under Circular 04 approved by the State Bank of Vietnam (SBV).

Regarding basic indicators such as total operating capital, as of the end of Jun 2019, it reached over VND 1,710 billion, up 6.38% compared to the beginning of the year; total mobilized capital reached over VND 1,535 billion, up 5.85%; total outstanding loans over VND 1,131 billion, up 2.92%. Besides, bad debt ratio was constrained below the permitted level, at 1.1% (3% is the limit)… Credit funds were profitable, total accumulation by the end of June increased by 16.5%...

Credit fund system is actively restructuring to improve operational efficiency. In photo: Customers carry out transactions at Phuoc Hoa credit fund.

SBV - Binh Duong Branch assessed operations of credit fund system in the province that in general, credit funds in the province operated efficiently, invested many efforts in capital source, balancing the mobilization of on-the-spot capital to meet lending demands of credit institutions. Thereby, they also showed their good use of capital, secured assets, and available capital to timely meet the demands of members.

To overcome difficulties

Binh Duong has attracted most domestic credit institutions. Therefore, the competition for idle money is fierce. Moreover, credit funds are implementing the restructuring plan according to Circular 04/2015/TT-NHNN and Circular 06/2017/TT-NHNN of SBV, so it is more or less difficult to achieve high growth rate as previous years.

Nguyen Thi Thuy Nga, Director of An Thanh credit fund (Thuan An Town), said to implement the restructuring plan associated with bad debt handling in the period of 2016-2020, this fund implemented the plan and complied with reporting regime in accordance with regulations of SBV. In particular, this fund completed most remedial targets according to the plan, such as meeting inter-commune conditions, members had maximum capital contribution rate of over 10%, deposit rate of members compared to the total deposit reached over 60% at the head office and transaction office.

According to Ms. Nga, the current difficulty of the fund is about the number of members, mobilized capital, and outstanding loans. Although there was growth, these did not reach targets set out in the plan. The reason was that the number of members often changed, because there was no need for loans, change of residence location, did not contribute capital regularly, then be expelled according to regulations, or the remedy of not lending to residents outside the area also partly affected the loan balance.

A representative of Phuoc Hoa credit fund(Phu Giao district) said, according to the plan, this fund had to separate Phuoc Vinh transaction office (PGD) to establish a new fund, because Phuoc Vinh town is not adjacent to Phuoc Hoa commune, where the head office is located. Therefore, if this plan is implemented, the fund will face difficulties and risks when collecting outstanding loans.

Although there were many other difficulties in implementing policies of the Government, credit funds all identified the implementation of the Circular 04 and Directive 06 of the Prime Minister was an indispensable and necessary condition for the development of a stable, safe and sustainable credit fund system; contributing to the development of cooperative economic sector in particular and agriculture - rural areas in general. Therefore, credit funds set up a number of solutions to overcome and meet the requirements of handling bad debts in a decisive and effective manner.

Ms. Nga said in the coming time, An Thanh credit fund proposed 6 solutions to meet requirements. In particular, continuing to implement the plan to terminate its operation in 2 non-adjacent wards of Binh Chuan and An Phu; Actively collaborate with local authorities to propagate credit funds, develop members, increase capital mobilized from members, and increase loan outstanding in their areas... Tran Van Xoan, Chairman of Phu Hoa credit fund (Thu Dau Mot City), said the fund continued to improve management and administration capacity to control risks at the highest level. In addition, continue to improve procedures to best serve deposits, loans of members and customers...

Reported by Thanh Hong – Translated by Ngoc Huynh