The PCF system was established in 1993, with the core objective of mobilizing resources within the community to provide mutual support among members, particularly in rural areas, where people still face difficulties in accessing financial services. PCFs operate on the principles of voluntariness, democracy, equality, joint capital contribution, co-management, and shared benefits, following the cooperative model.
After more than three decades of formation and development, the PCF system has gradually expanded and been consolidated across the country, playing an important role in providing banking services in rural areas. It has made a significant contribution to poverty reduction, socio-economic and agricultural development, rural advancement and the promotion of social welfare at the grassroots level.
Nguyen Thi Phuong, Chairwoman of the Board of Directors of Inter-communal Khang Tho PCF (Ha Tinh), shared that being aware of its vital role, the PCF has always considered capital mobilization and member development as two closely linked pillars that determine its sustainable growth. This is not merely about attracting cash flow, but also about building financial–social–community relationships with each member. To date, the fund has 4,084 members, with total capital reaching VND 438 billion and outstanding loans of VND 360 billion.
However, the development process of the PCF system in the central region and nationwide still faces several challenges and limitations. Notably, some funds still have weak financial capacity, management, and operational governance. In addition, system-wide connectivity remains loose. These shortcomings need to be addressed promptly to ensure that the PCF system stays closely connected with its member communities, meaningfully contributes to socio-economic development, safeguards system safety, and supports political stability and social order at the local level.
The operations of PCFs remain stable and uninterrupted following administrative mergers
In recent times, the restructuring of commune-level administrative units has posed significant challenges to the operations of PCFs, a unique type of financial institution closely tied to local communes and directly influenced by the geographical, demographic, and economic characteristics of each area.
In practice in many localities, the merger of communes has created difficulties in the issuance, reissuance, and correction of land use right certificates and certificates of ownership of assets attached to land for local residents. This, in turn, affects the ability to use such assets as collateral for loans at PCFs. In addition, the process of handling and recovering non-performing loans (NPLs) through civil litigation and asset liquidation remains slow and prolonged. Meanwhile, most PCFs are small in scale with limited accumulated capital. Some funds still lack effective measures for debt recovery, with the handling of bad debts proceeding slowly and without sufficient determination.
Mr. Hoang The Son, Chairman of the Board of Directors of Van Trach PCF (Quang Tri), said that prior to the administrative merger, the fund operated with one head office and four transaction offices across five adjacent communes. Currently, the fund has 8,000 members, total operating capital of VND 1,250 billion, outstanding loans amounting to VND 900 billion, and a non-performing loan (NPL) ratio of just 0.3% of total outstanding loans.
Mr. Son emphasized that the Party’s policy on administrative unit consolidation is sound and necessary to streamline the organizational structure and improve management efficiency. However, following the merger, there are now cases where multiple PCFs operate within a single commune, or some funds have had their operating areas divided into neighboring communes where other PCFs are already in operation. Therefore, the SBV should conduct thorough research and issue specific guidance to facilitate stable operations, promote sustainable development, and enhance the financial capacity of PCFs, thereby better serving the needs of the people.
PCFs play an important role in providing banking services in rural areas.
Currently, in the Central region as well as in many other parts of the country, PCFs have experienced changes in their operational areas due to administrative mergers. However, most of them have maintained their existing operations, including in areas that are no longer adjacent to their main offices. In these areas, the PCFs have temporarily suspended the admission of new members.
According to a representative of the SBV Branch in Region 8, in order to ensure the smooth operation of PCFs following administrative mergers, the branch has strengthened management and supervision over the affected credit funds to maintain normal operations and promptly address emerging issues such as overlapping operational areas or potential credit insecurity.
At the same time, PCFs themselves need to continue enhancing their management and operational capacity — both professionally and ethically; improving financial soundness; reinforcing operational capacity; and increasing the safety and effectiveness of credit activities. Most importantly, the PCF system must ensure that services to members are provided in accordance with legal regulations, while upholding the principles of voluntariness, autonomy, self-responsibility, mutual benefit, and cooperation for community development.
In addition, many PCFs are actively implementing modernization initiatives such as developing digital banking services, enhancing competitiveness, and moving toward green banking and green credit models aligned with sustainable development tailored to specific localities.
On the part of local authorities, after administrative mergers, commune-level People’s Committees need to strengthen their role in state management of PCFs. This includes close coordination in supervision, public communication, and shaping public opinion to ensure political stability and social order. At the same time, they should support PCFs in addressing persistent challenges such as land-use planning, office allocation, personnel management, and the recovery of non-performing loans.
The Banking Times
