Lesson 1: The effectiveness of savings and loan groups

(Baonghean) - Editorial Note: Savings and Loan Groups at the grassroots level are not only the fastest and most effective organizations for transferring preferential state capital to poor and near-poor households and other policy beneficiaries, but also manage, supervise, and collect loan repayments. Therefore, entrusted organizations (from the Social Policy Bank Branch) always pay attention to developing and improving the quality of operations of savings and loan groups at the grassroots level, considering this a crucial foundation for the success of the preferential credit program in our province. Baonghean Newspaper would like to present a special feature on improving the quality of savings and loan groups, their effectiveness, limitations from entrusted organizations, and solutions to overcome them.

Mr. Nguyen Van Hoa, Head of Savings and Credit Group No. 5 of the Veterans Association of Nghia Binh commune, Tan Ky district, said: “The group has 34 members participating in loans with outstanding debt of 1,271 million VND. The entire capital is entrusted by the Veterans Association from the Social Policy Bank, and members have invested in forest planting, buffalo and cattle breeding, and business services. For example, Mr. Vo Dinh Mon's family borrowed 75 million VND to expand their forest planting business, while Mr. Nguyen Van Son, Mr. Hoang Van Lam, Mr. Pham Van Thong… each borrowed 30 million VND to raise buffalo and cattle, which has been very effective. Due to good capital management and investment for the right purposes, Savings and Credit Group No. 5 currently has no overdue debts.” Currently, the Tan Ky Veterans Association receives mandates from the Social Policy Bank to implement 10 loan programs, including: loans for poor and near-poor households, students, job creation, labor export, clean water and sanitation, housing, production and business in disadvantaged areas, and reforestation… These are preferential credit programs of the State for poor and near-poor households and other policy beneficiaries.

To effectively manage and utilize this capital, the Tan Ky Veterans Association always focuses on developing savings and loan groups in communes and towns and strengthening the team of loan group leaders. The Veterans Association collaborates with the Social Policy Bank to organize training courses on loan disbursement and capital utilization. One of the key factors contributing to the Tan Ky Veterans Association's successful implementation of its entrusted tasks is strengthening the inspection and supervision of loan activities at the groups, thereby promptly detecting and addressing instances of fraudulent borrowing, misappropriation, and delayed repayment. These practical approaches have gradually improved credit quality, and currently, with a total of 3,160 households borrowing capital in 83 entrusted savings and loan groups of the Veterans Association, the outstanding debt is 71,783 million VND, but overdue debt is only 17 million VND. For many years, the Tan Ky Veterans Association has been one of the units that has performed well in receiving entrusted capital from the Social Policy Bank.

Residents of Que Son commune, Que Phong district, are receiving financial support to invest in the development of cattle farming.

Determined to make good use of preferential loans from the State, the Provincial Veterans Association focuses on the quality of operation of the savings and loan group network at the grassroots level and resolutely refuses to establish savings and loan groups if they do not meet the requirements and tasks. To date, there are still 20 grassroots Veterans Association branches that have not accepted entrusted funds. Mr. Cao Luu, Head of the Economic Committee of the Provincial Veterans Association, said: “We have identified the Savings and Credit Group as a decisive factor in managing and recovering capital. Therefore, we have guided the grassroots level to select staff for the Savings and Credit Group with the qualities and capabilities to meet the requirements. At the same time, we focus on the review and assessment of loan applicants, requiring group staff to visit households to understand and clearly identify the loan purpose and the amount of capital needed… In some necessary cases, the staff of the Savings and Credit Group even go directly to the households to buy seeds and fertilizers, bring them to the families, and provide technical guidance on production. Currently, in 460 communes across the province, there are a total of 1,725 ​​Savings and Credit Groups of the Veterans Association with a total of 55,385 households participating in borrowing capital. Most of the Savings and Credit Groups of the Veterans Association operate effectively, and through this organization, poor households have received loans totaling 361,148.” million dong, near-poor households borrowed 132,146 million dong, students borrowed 561,921 million dong…”.

Another organization that has successfully utilized the entrusted funds of the Social Policy Bank is the Nghe An Women's Union. The Union recognizes that savings and loan groups play a crucial role in determining the success of managing, utilizing, and recovering capital. Therefore, from the establishment of the groups to the selection of staff, everything is done meticulously. As a result, to date, the Women's Union's savings and loan groups operate in 5,399 hamlets with 2,919 groups, attracting 104,271 members. Although the network of savings and loan groups has developed widely throughout the province, the Women's Union always focuses on training and professional development for staff and improving the quality of the groups' activities. From the beginning of 2014 to the present, the various levels of the Union have coordinated with relevant departments and agencies to open 803 training courses on transferring scientific and technical knowledge to 88,380 members on techniques for caring for crops and livestock. Simultaneously, coordinate with the Social Policy Bank to disseminate information and policies related to preferential credit.

Monthly, the Social Policy Bank, in coordination with the entrusted lending organizations at the commune level, reviews and monitors the operational situation of the Savings and Credit Groups to promptly reorganize and strengthen those groups with changes in management boards. It can be seen that the Women's Union at all levels has seriously implemented the six stages of entrusted lending. The entrusted capital is well managed by the Women's Union at all levels, loans are approved for the right recipients, and members use the borrowed capital for the right purposes and effectively. Currently, the total outstanding loan balance is nearly 2,322 billion VND. According to inspections and assessments by relevant levels and sectors, nearly 78% of the Women's Union's Savings and Credit Groups are operating well, and nearly 21% are rated as good... Ms. Le Thi Huong Giang - Vice President of the Provincial Women's Union, said: "From entrusted capital sources, poor and near-poor women and other policy beneficiaries have been able to borrow capital to develop their family economies, receive training in the transfer of scientific and technological knowledge, and share experiences in economic development. As a result, many borrowers have boldly invested in transforming production, business, livestock farming, and crop cultivation with high economic value, developing family economies towards farm-based production, large-scale livestock farming, fruit tree cultivation, and developing traditional crafts... contributing to job creation and gradually improving and raising family living standards."

One of the key factors contributing to the success of preferential credit programs is the network of savings and loan groups. Mr. Nguyen Van Vinh, Deputy Director of the Nghe An Branch of the Vietnam Social Policy Bank, stated: “Through entrusted organizations, 8,130 savings and loan groups have been established operating in 5,399 hamlets and villages throughout the province. This not only facilitates access to loans for poor and near-poor households and policy beneficiaries, but also actively supports the management, supervision, and debt recovery at the grassroots level… In recent times, entrusted organizations at all levels have actively coordinated with the Nghe An Branch of the Vietnam Social Policy Bank to promote local credit programs. As a result, the total outstanding loan balance of entrusted organizations has reached 6,237 billion VND, and in the first seven months of 2014, the savings and loan groups reviewed loan applications totaling 1,041 billion VND. Furthermore, through this network, they have actively mobilized deposits exceeding 262 billion VND to support additional lending capital.” Clearly, with the very active support of entrusted organizations (including the Veterans Association, the Women's Union, the Farmers Association, and the Youth Union), many channels have been created to provide capital support to the poor, near-poor, and policy beneficiaries to invest in production development and stabilize their lives.

(to be continued)

Hoang Vinh - Quynh Lan