Implementing Decision No.149/QD-TTg dated January 22, 2020 on “Introducing national financial inclusion strategy by 2025 with orientations towards 2030”, the Governor of the State Bank of Vietnam (SBV) issued Decision No. 1309/QD-NHNN dated July 24, 2020 “Promulgating the Action Plan of the Banking Sector to implement the National Comprehensive Financial Strategy to 2025, with orientations to 2030” (Decision 1309) for implementation in the banking industry
Initial results…
Section 3.2 (Decision 1309) stipulates: “For units that must develop a development strategy in accordance with the law and Decision No. 34/QD-NHNN dated January 7, 2019 of the Governor of the SBV on the promulgating the Action Program of the Banking sector to implement the Strategy on Development of the Banking Industry in Vietnam to 2025, orientation to 2030. Reviewing, supplementing and integrating tasks related to the Strategy implementation into development strategy of their units, submit them to competent authorities for approval”. Because the operational objectives of the Co-operative Bank of Vietnam (Co-opBank) and the People’s Credit Funds (PCFs) are community support, agricultural and rural development, contributing to hunger eradication and poverty alleviation, social security… so the implementation of the Comprehensive Financial Strategy is closely linked to the roles and tasks of Co-opBank. Therefore, right after receiving Decision 1309, Co-opBank disseminated and thoroughly grasped the Strategy and Action Plan of the Banking sector to implement the Strategy to all units in the system, requesting that the units integrate it into their annual program and work plan and in the Digital Transformation and Information Technology Strategy to 2025, orientation to 2030. In addition, assigns functional and research departments to review, supplement and integrate into the Co-opBank development strategy up to 2025, with orientation to 2030 according to the provisions of Decision 1309. At the same time, continue to promote programs and action plans in general, and restructuring plans associated with bad debt settlement in particular, which identify specific tasks and assign tasks to each unit to implement. As a result, the targets of Co-opBank have basically achieved. Specifically: by October 31, 2022, the total capital of Co-opBank is VND 49,953 billion; total loan balance is VND 30,157 billion; bad debt ratio is less than 2% of total outstanding loans; the plan to deal with bad debts according to Resolution 42 is achieved.
Customers making transactions at Co-opbank Phu Tho branch
As a role of Banking for PCF system, Co-opBank with 32 branches and 66 transaction offices always focuses on implementing the assigned responsibilities, taking care of and supporting nearly 1,200 PCFs in 57/63 provinces/cities. Thereby, comprehensive financial products have been provided to member credit unions to directly or indirectly bring comprehensive financial products to people in agricultural, rural and remote areas, of which 45% of members are female.
Co-opBank always focuses on prioritizing capital intermediation: receiving deposits and extending credit loans of member credit unions. Besides, it also lends to support liquidity and support PCFs in difficulty under the direction of the SBV. Diversifying products, lending syndicated loans with PCFs to serve its members.
In particular, always research, develop and provide products and services based on digital technology for PCFs and customers, especially non-cash payment services. Invested in CF-eBank e-banking channel (rural-urban linkage to poverty reduction) to train and transfer products to PCFs, admitted 654 member credit unions to bring Co-opbank payment network to 752 points: 32 branches, 66 transaction offices, 654 PCFs. Payment and remittance activities of Co-opBank and PCFs have achieved positive results, transactions are processed safely and accurately, remittance turnover has increased continuously over the years. As of October 31, 2022, the transaction results through the CF-eBank system: remittance turnover is nearly VND 324,100 billion with 520,509 transactions (of which, transactions from PCFs were nearly VND 32,720 billion with 218,655 transactions); money transfer turnover reached nearly VND 285,660 billion with 366,365 transactions (of which, those from PCFs were nearly VND 13,500 billion with 190,587 transactions). Co-opBank also maintains payments through inter-bank and multilateral electronic payment channels to meet the increasing demand for money transfer of PCFs and customers. From March 1, 2022, Co-opBank officially launched the service “fast money transfer 24/7 at the counter” to meet the needs of instant money transfer and receipt of customers and PCFs with an average of daily are thousands of transactions, the amount of hundreds of billions of VND. Co-opBank also continues to deploy payment account overdraft products for PCFs participating in the CF-eBank system in order to support solvency, speed up payment of PCFs and always spend hundreds of billions VND to granted overdraft limit for more than 400 PCFs.
For Card products and Digital banking services: By October 31, 2022, Co-opBank has 6 ATMs and 410 POS machines at 32 branches, 66 transaction offices, 251 PCFs, will continue to install POS for newly registered PCFs to serve card transactions for their customers. Co-opBank does not invest in developing ATM network with normal functions, but researches and invests in deploying Smart ATM equipment so that PCF members as well as customers in remote areas will be convenient in transactions with banks. From opening a payment account to registering for a card, saving, borrowing, transferring money, paying bills, etc. Up to now, Co-opBank has completed the conversion of magnetic cards to chip cards and issued more than 66,000 cards, of which the number of cards issued to employees and members of the PCFs are nearly 20,000 cards. The number of transactions from Co-opBank and alliance cards at Co-opBank’s ATMs is about 150,000 items with the amount of nearly VND 50 billion. Co-opBank continues to promote the implementation of overdraft limit operations for debit cards for customers and its employees also PCF’s employees and members. As of October 31, 2022, about 5,000 customers have been approved for overdraft limits with a total limit of nearly VND 440 billion, overdraft balance of nearly VND 160 billion; in which, approved overdraft limit for 3,200 customers who are employees of nearly 160 PCFs (via card and RLOS system), reaching a total limit of nearly VND 220 billion. The number of transactions made by card in the form of cash withdrawal via POS/ATM, payment of goods and services, money transfer of the PCF… also increased compared to 2021 (performed 49,734 transactions, with an amount of nearly VND 2,840 billions).
In 2022, Co-opBank launched the Co-opBank Mobile Banking which allowing customers to use mobile devices to perform transactions, transfer money, top up, pay bills, book airline tickets, movie tickets… directly on the app. As a result, by October 31, 2022, 158,206 customers have registered to use (of which, there are 19,313 PCF’s customers) and 136,857 customers have successfully activated; Number of successful transactions via Mobile Banking app: 931,768 items with an amount of nearly VND 21,000 billion.
With the mission of supporting the sustainable development of the PCF system, encouraging PCFs to deploy Co-opBank’s digital banking products and services to its members, Co-opBank has devoted a great deal of resources to implementing the policy of exemption/reduce for all fees such as: free of charge to join the system, annual fee, account management fee, payment account overdraft fee, fees organize training classes, technology transfer, documents, textbooks, lecturers and software copyright costs, implementation support, operation and troubleshooting…, 100% free of charge for money transfer transactions to/from, bill payment transactions… for PCFs on the e-banking system; free on Co-opBank Mobile Banking app (service registration fee; money transfer fee inside and outside the system; transaction fee for phone top-up, bill payment…; investigation fee, complaint fee) ; free issuance, annual fee for customers when registering and using Co-opBank Napas chip cards. At the same time, we are grateful to PCF’s members and customers who have used the service with incentives to donate money to mobile accounts, give discount shopping vouchers, etc.
The lending to individual and enterprise customers is processed after prioritizing fully meeting the capital needs of the PCFs and in accordance with the assigned credit growth targets, in order to improve the efficiency of capital use, contributing to strengthening the financial capacity to support the PCF system. Loan objects are individuals (mainly teachers), small and micro enterprises and co-operatives to develop production and business, serving life in agricultural and rural areas. The loan term is from 36-60 months and the amount is suitable for income, cash flow, principal and interest paid monthly to help customers easily manage the repayment schedule, so it has helped many especially female customers can access loans to serve the needs of their life, help improving their family’s economic. Co-opbank’s outstanding loans for agriculture and rural areas always account for 70-80% of total outstanding loans; as of October 31, 2022, reached nearly VND 22,000 billion, accounting for 72% of total outstanding loans. In which, outstanding loans to the PCFs are more than VND 5,000 billion, outstanding loans to other co-operatives are from VND 3-5 billion.
Through PCFs and its products and services, Co-opBank and PCFs actively support members in the area (of which more than 45% are female) in both capital and business experience, contributing to improving quality of human resources in agriculture, new rural construction and sustainable poverty reduction, especially in remote highland areas. In the first 10 months of 2022, Co-opBank held 6 training courses on CF-eBank money transfer, 24/7 fast money transfer, top-up and bill payment at the counter; 09 classes of professional training for the CF-eBank e-banking system on new software and training on card products for PCFs, developed a mobile application (mobile app) Co-opsmart to integrate lectures on financial knowledge, provide necessary information to put on the app market so that users can easily download and use it and can learn anytime, anywhere. Co-ordinate with the Vietnam Association of People’s Credit Fund (VAPCF) to organize training courses on tax, skills in performing internal audit of the PCFs, instruction in reading financial statements… Especially, organizing seminars with PCFs to discuss about the safety of the PCF system…
Co-opBank also actively implemented financial communication programs including developing banking products and services, guiding people on how to access products and services; at the same time, providing people with knowledge about the utility, value, and how to use non-cash payment methods to ensure security, safety, confidentiality, and minimize risks when using digital banking services.
…Some orientations
Beside the achieved results, Co-opBank also faced many difficulties such as: limited charter capital, weak information technology infrastructure, lack of human resources; mechanisms and policies to ensure safety in operation and linkage between the PCFs and Co-opBank are incomplete and have no specificity; subject to a lot of competition from commercial banks… In order to promote its role as the Bank of the PCFs and well implement the National Comprehensive Financial Strategy, Co-opBank has a number of recommendations and proposals to the SBV; specifically:
The SBV, the Ministry of Finance, the Ministry of Planning and Investment and the Ministry of Justice are requested to pay attention and support to submit to the Government for approval for additional funding to increase the charter capital for Co-opBank by VND 5,000 billion to increase the charter capital to VND 8,000 billion in the period of 2021-2026 in order to develop Co-opBank by 2030 into a modern focal bank capable of serving the PCF system with safe and sustainable operation; at the same time, creating a foundation for Co-opBank to restructure and successfully implement digital transformation, so as not only to become a focal bank to support and provide modern banking products and services for the PCF system but also serving its customers who are individuals, small and medium enterprises, micro enterprises and other types of co-operatives.
Supporting Co-opBank in gaining access to capital from international banks and financial institutions; Thereby taking advantage of financial and technological support, learning management methods and advanced techniques to receive and transfer to PCFs, support PCFs to keep up with the general development of the whole banking industry.
For loans to intermediate capital between Co-opBank and PCFs, on the basis of the specific provision amount to be made and the provisioning rate, it is proposed to allow Co-opBank to make provision for risks with PCF loans with a maximum period of 5 years. Yearly, based on its financial capacity, Co-opBank makes provision for risks of debts which are classified into groups but at least equal to 20% of the specific provision that must be made according to regulations.
Proposing to soon have a mechanism to handle Co-opBank’s support loans to members of PCFs that face difficulties or show signs of unsafety in operation when debts cannot be recovered.
The SBV will pay more attention in researching and developing Circulars and documents specifying and guiding Co-opBank’s capital intermediating and lending to PCFs.
The SBV has regulations allowing Co-opBank to borrow capital from Vietnam Deposit Insurance through the issuance of bonds (or the SBV has a mechanism to allow Co-opBank to borrow capital from the Vietnam Deposit Insurance and from other sources) to improve the financial capacity of Co-opBank.
The SBV shall co-ordinate with relevant ministries to design a mechanism to share the national database on population to facilitate CIs in providing financial products and services to customers.
In which, the most feasible and decisive solution is to be supported by the State, providing an additional VND 5,000 billion to increase charter capital for Co-opBank in order to increase its strength and create favorable conditions for Co-opBank modernizes, implements digital transformation and be able to become the Bank of all PCFs and together with the PCFs system well fulfills the objectives and tasks of comprehensive finance in the digital era.
Phạm Tây
