On April 17, 2025, the Co-operative Bank of Vietnam (Co-opBank) issued the Regulation on Management and Use of the Safety Fund for the People’s Credit Fund (PCF) System under Decision No. 175/2025/QD-NHHT (hereinafter referred to as Regulation No. 175), marking a significant milestone in supporting and ensuring the safety of the PCF system in Vietnam.
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In the context of the PCF system continuing to play an important role in local economic development and community finance, improving the support mechanism for struggling PCFs has become an urgent task. Regulation No. 175 is the result of a thorough review, broad consultation, and practical revision process aimed at ensuring system safety and stability, demonstrating Co-opBank’s commitment to fulfilling its mission of supporting, linking, and leading the PCF system toward sustainable development.
Context and Urgency for Improving the Support Mechanism
In recent years, the Safety Fund managed by Co-opBank has become a vital tool in supporting PCFs facing financial and liquidity difficulties, thereby maintaining the safety and stability of the system. Through capital support from the Safety Fund, many PCFs have gradually resumed operations and regained the trust of members and customers.
However, in the context of significant changes in the legal framework—particularly the Law on Credit Institutions 2024 No. 32/2024/QH15 effective from July 1, 2024, and Circular No. 27/2024/TT-NHNN issued by the State Bank of Vietnam—amending and supplementing the Safety Fund regulations has become more essential than ever. The revision not only aims to promptly update new legal provisions to ensure compliance and consistency across the system but also to improve risk management capacity and effectively utilize the Safety Fund’s resources. Furthermore, the amendments aim to enhance support for PCFs in difficulty, contributing to a stable and sustainable system while strengthening the confidence of members and communities in the PCF system.
A Systematic, Scientific, and Practical Process of Regulation Development
With the principle of “practicality as the basis, legality as the foundation,” Co-opBank developed Regulation No. 175 in a comprehensive, methodical, and rigorous manner. Immediately after the issuance of new legal regulations, Co-opBank reviewed relevant legal documents including the 2024 Law on Credit Institutions, Circular No. 27/2024/TT-NHNN, and Circular No. 37/2024/TT-NHNN. Based on this, they analyzed and compared the implementation practices to identify inadequacies, thereby developing suitable amendments in line with new management requirements and current system conditions.
To ensure that the Regulation complies with legal provisions, is feasible, and meets actual needs, the drafting process involved feedback from Co-opBank’s functional departments, Co-opBank branches, the Vietnam Association of People’s Credit Funds (VAPCF), SBV branches in provinces/cities, and PCFs nationwide. All comments were carefully reviewed and selectively adopted. The revisions followed the principle of aligning with current legal frameworks while ensuring practical applicability, supporting PCFs effectively. The Regulation was finalized with more specific, detailed, and clear provisions. This contributes to improved Safety Fund management and usage and lays the foundation for timely, targeted, and suitable support aligned with real-world PCF situations.
Key Highlights of Regulation No. 175/2025/QD-NHHT
Expansion of fee exemption beneficiaries: The new Regulation expands the scope of Safety Fund fee exemptions, enhancing flexibility and compassion in supporting the PCF system. Previously, only PCFs under special control were exempt, but now the Regulation includes other specific cases. For example, PCFs under early intervention are newly eligible to ease financial pressure and facilitate recovery. Likewise, PCFs undergoing dissolution or liquidation are also exempt from fees, removing unnecessary burdens from inactive institutions.
Expanded and categorized eligible borrowers from the Safety Fund: In addition to PCFs with financial and liquidity difficulties or under special control, Regulation No. 175 adds two new groups eligible to borrow from the Safety Fund: PCFs under early intervention and PCFs facing mass withdrawals as defined by SBV. This categorization provides a clear legal basis and borrowing conditions, enabling case-specific loan documentation. This shortens the appraisal process, minimizes processing errors, and ensures administrative transparency and completeness. The Safety Fund will apply flexible, appropriate interest rate frameworks for each group and loan purpose. This supports the principle of “timely and appropriate assistance” while strengthening PCFs’ financial capacity and promoting operational recovery—enhancing the overall system’s stability.
Mechanism for risk provision and handling of bad debts: To strengthen risk control and protect the Safety Fund’s resources, the new Regulation defines clear rules for risk provisioning and writing off uncollectible special loans. It also provides more specific measures for dealing with bad debts, ensuring financial transparency, minimizing losses, and improving the Fund’s operational efficiency..
Additional support expenditures for the PCF system: o reinforce its role in accompanying and effectively supporting the PCF system, the Regulation expands support spending in more flexible and practical directions. These include communications and branding to enhance PCFs’ image and reputation, professional training and workshops to improve capacity, and even support for IT tools and software. These additions demonstrate a long-term support orientation, helping PCFs become more professional, efficient, and sustainable in the new context.
Commitment to Coordination and System Leadership
The issuance of Regulation No. 175 is not only a timely compliance action with SBV’s new rules but also affirms Co-opBank’s proactive and responsible role in coordinating, supporting, and protecting the PCF system. Moving forward, Co-opBank will continue modernizing support processes, applying technology to Safety Fund management, and closely cooperating with SBV and relevant agencies to maximize its role in connecting and safeguarding the microfinance system—the foundation for sustainable community development..
By placing PCFs at the core of all development strategies, Co-opBank clearly defines its mission to accompany the PCF system in all stages—from financial safety consolidation and risk response to operational expansion support. This companionship is not only financial but also includes technical, regulatory, and strategic support, acting as the extended arm of SBV in supervision and inspection. As such, Co-opBank increasingly affirms its role as “The Bank of PCFs,” a solid pillar for the system’s safe, efficient, and sustainable operation.
PCF member department
