Standing Deputy Governor of the State Bank of Vietnam (SBV) Mr. Dao Minh Tu emphasized: The project “Strengthening the People’s Credit Funds” has made positive contribution for Vietnam in general and the People’s Credit Funds (PCF) system in particular, especially, in the context of implementation of process comprehensive financial development orientation of the country and in the project of restructuring credit institutions (CIs) of Vietnam, including the restructuring of the current PCFs system.
On December 12, 2022, the Co-operative Bank of Vietnam (Co-opBank) held a meeting to review the 5-year implementation of the project “Strengthening the People’s Credit Fund System” (STEP), sponsored by Global Affairs Canada (GAC), jointly implemented by the Développement International Desjardins (DID) and Co-opBank and the SBV is the governing body. The main purposes of the preliminary meeting is to ensure the project outputs are replicated and hence the sustainability of the project.
SBV Standing Deputy Governor Dao Minh Tu at the meeting
75% of the project plan has been completed
According to STEP Field Director Claude Lafond, the STEP project officially started operations in November 2017. The long-term goal of STEP is to contribute in poverty reduction in Vietnamese rural areas by increasing access to financial services as well as improving the financial security of male and female customers in rural areas through 2 main objectives which are: (1) strengthening the supervision support capacity of the Co-opBank to PCFs system; (2) strengthening the PCFs’s abilities to provide sustainable financial products and services to meet the needs of rural customers, especially female customers, while ensuring profitability and safety standards.
Up to now, the four main components of the project have been implemented with impressive results. In the Risk Management component, the Project has completed the Internal Audit Toolkit part 2 including procedures for checking accounting, IT and gender equality as well as training for Co-opBank and PCFs’ staff.
The PCFs Management Reporting Information Management System (PRMS) has also been completed and officially put into operation at the Co-opBank, replacing the old CF-eMIS system from October 1, 2020. With 22 output reports, the PRMS is an effective tool to help improve the supervisory capacity of the Co-opBank for the PCFs network. Currently, STEP is in the process of developing a PCFs Risk Management Framework to support the management and supervision of PCFs, as a basis for developing related mechanisms and policies.
The Product and Service component recognizes the successful design of two new credit products: Agricultural loans and Production and business loans.
Cash flow-based lending products help PCFs reach a wide range of members/customers, especially female customers, encourage PCFs to lend unsecured loans to customers. The Business Development Service (BDS) component stands out for its achievement in the birth of a Customer Care Toolkit that supports Co-opbank and PCFs’ credit officers communicate and interact with customers in the process of loan appraisal in order to good financial habits, thereby, increasing customers and members’ trust and satisfaction.
Currently, STEP is developing a mobile application (Co-opSmart) to provide financial knowledge and support for business development for households, small businesses who are Co-opBank and PCFs’’ members and customers. It is expected that in early 2023, this application will officially be launched.
Co-opBank Chairman Mr. Nguyen Quoc Cuong shared the results of the STEP project
E-Banking is considered an outstanding success component. STEP project collaborated with Co-opBank to complete the E-Banking digital bank with full functionality of a modern payment system, improving its ability to provide diversified, safe and convenient products and services with low cost and reasonable fees; improving the competitiveness of the Co-opBank and the PCFs system; at the same time, contributing to the achievement of strengthening financial inclusion in the agricultural and rural areas. As of November 30, 2022, there are 603 PCFs in the entire system using the E-banking service. The total number of transactions since the start of phase 1 back in January 2022 is nearly 423 thousand items, the total transaction value is more than 192 trillion VND.
In addition, in order to support Co-opBank to clearly define the vision and orientation on the focal role of the PCF system, the STEP project has coordinated with Co-opBank to develop an Institutional Development Plan to 2025 with orientation to 2030; contributing comments to draft documents of circulars, projects related to the operation of the PCFs developed by SBV; support Co-opBank to develop an IT Strategy; support Co-opBank and PCF system in digital transformation for the period of 2021-2025, with a vision to 2030, handed over to Co-opBank in January 2022;
The elements of Gender Equality and Environmental Protection have also been integrated throughout the project’s activities such as: completing the report on gender data of PCFs on the PRMS system, allowing PCFs to monitor and develop formulating policies, making decisions taking into account the gender characteristics and needs of members and customers; propaganda and awareness raising through seminars and training sessions on the content of Gender Equality for staff of Co-opBank and project-participated PCFs.
Further enhance STEP efficiency
Co-opBank Chairman Nguyen Quoc Cuong highlighted that the STEP project sponsored by Government of Canada could not have come to Co-opBank and the PCFs system at a better time. The project’s activities are aimed at improving the competitiveness of PCFs and helping Co-opBank improve its role of supporting, supervising, orienting, and managing the strategy of PCFs.
At the same time, it also strengthens the ability to provide sustainable financial products and services for the PCFs system and its members, providing opportunities for comprehensive financial access as well as providing more job opportunities for its members in remote areas.
“It can be said that STEP project is a lever to help Co-opBank better perform its duties as the focal bank of the PCFs system. And in the context of the strong digital transformation trend in the financial industry, the implementation of the components of STEP Project is an important step in the digital transformation journey, maintaining the sustainability and development ability of the PCFs system with Co-opBank,” said Mr. Cuong.
Ambassador Extraordinary and Plenipotentiary of Canada to Vietnam, Mr. Shawn Steil spoke at the meeting
Speaking at the meeting, Ambassador Extraordinary and Plenipotentiary of Canada to Vietnam, Mr. Shawn Steil expressed his pride in the sponsorship related to STEP project as well as previous projects of Canadian Government that contributed to the development of financial resources and comprehensive policy in Vietnam.
Appreciating the vision of the SBV in improving the performance of the PCFs system and implementing a comprehensive financial strategy in Vietnam to 2030, Mr. Shawn Steil also appreciated that Deputy Governor Dao Minh Tu’’s direction in organizing a preliminary review of 5 years of STEP project implementation.
Mr. Shawn Steil said that this is an important time for the world and Vietnam after the pandemic. For Vietnam, except for economic recovery, comprehensive financial development is necessary to support disadvantaged people such as the poor and ethnic minorities. “Through the survey, Vietnamese people have many conditions for economic development. So I really appreciate the efforts of STEP project as well as the efforts of Co-opBank in implementing the project” Mr. Shawn Steil expressed.
Chairing and directing at the meeting, SBV Standing Deputy Governor Dao Minh Tu emphasized: this is an important project for Vietnam in general and the PCFs system in particular, especially, in the context of implementation of process comprehensive financial development orientation of the country and in the project of restructuring credit institutions (CIs) of Vietnam, including the restructuring of the current PCFs system
“We appreciate that STEP project has achieved very important results and provided very practical products for enhancing the focal role as well as supporting role of Co-opBank to PCFs system, first of all 75 pilot PCFs, and at the same time, strengthening the reporting information system to help PCFs comply with the reporting regime, which is also an important source of information to help strengthen the management and supervision capacity of SBV, especially in the context that SBV is increasing the consolidation and restructuring of the PCFs system in the recent years and next 5 years”, SBV Deputy Governor Dao Minh Tu emphasized.
Overview of the meeting
Agreeing with the upcoming program and actions of STEP Project, Mr. Tu said that if the project implementation time expires (until March 31, 2024), the remaining tasks cannot be completed in the context of our wishes is expanding the project’s achievements not only for 75 PCFs but the entire PCFs system so that all our members can benefit. In that circumstances, SBV will consider extending the time to implement STEP project, to help bringing benefits for the whole PCFs system.
At the meeting, STEP project management board management representative makes two proposals: (i) Testing and application of information reported from PRMS in remote monitoring of PCFs; consider amending the instructions on information in some periodic PCF reports submitted to the SBV to ensure adequate input information, increase accuracy, reliability and promote the effectiveness of the PRMS in delivery the management and supervision of PCFs system; (ii) SBV encourages PCFs to apply the Internal Audit Toolkit, the Internal Audit Report Template and the Agricultural Loan Appraisal Form for the cash flow-based loan product developed by STEP Project.
“We completely agree on these two proposals and will assign the SBV Banking Supervision Agency as the focal point to have additional support in terms of executive direction and, if necessary, as a governing unit request PCFs must comply,” said the Deputy Governor.
SBV Deputy Governor Mr, Dao Minh Tu also agreed with the idea of licensing more PCFs to conduct E-Banking so that PCFs can have more products to serve its customers. The SBV Banking Supervision Agency, together with the STEP Project and Co-opBank consider the proposals, thereby promulgating documents directing PCFs to participate.
SBV Deputy Governor assigned the agencies, especially the SBV Banking Supervision Agency and the Information Technology Department to consider and study an IT project that the SBV is designing for implementing better in remote supervision of PCFs system. Along with that, based on the existing contents and products of STEP Project to create consistency, avoid making too many reports for the PCFs.
Appreciating the support of the Canadian Government, Global Affairs Canada (GAC) and other Canadian Government ministries and agencies’ which have supported Vietnamese banking industry and PCFs system for many years, SBV Deputy Governor Dao Minh Tu said that in Vietnam’s socio-economic development orientation, especially Vietnam’s comprehensive financial development strategy, the PCFs system is considered as an active channel for mobilizing and supplying capital as well as provide banking and financial services, suitable for the typical model of Vietnam, especially in remote areas.
And in order to restructure the PCFs system to improve the quality of its activities and bring benefits to the people of this region, it needs the active support of the Canadian Government, ministries, Agencies and the Embassy.
“Like the point of views shared by Canadian Extraordinary and Plenipotentiary of Canada to Vietnam, Mr. Shawn Steil, we hope to continue STEP project with technical assistance as well as helping SBV to restructure the PCF’s organization and operation in a manner suitable to the current economic conditions and development of Vietnam. Currently, DID has changed the model at least 2-3 times, but in Vietnam, PCF’s model has not been improved or reformed by a new model which is more suitable in current economic situation” shared by SBV Deputy Governor.
