People's Credit Fund model contributes to local economic development

(Baonghean) -Currently, in the province, there are 59 QTDND (including 2 QTDND in Tay Thanh commune (Yen Thanh) and Bong Khe commune (Con Cuong) which have just come into operation in 2017.

Implementing Directive 57-CT/TW of the Politburo on consolidating, perfecting and developing the People's Credit Fund system, the project of restructuring credit institutions, and other legal provisions with the attention and direction of local Party committees and authorities, and the inspection and supervision of the State Bank of Vietnam, Nghe An Branch, the People's Credit Fund system in the province has basically been completed in all aspects of operation such as: organizational structure, governance, mobilization and lending... operating safely and effectively, contributing to repelling black credit, eliminating hunger, reducing poverty, and developing the local socio-economy.

Currently, in the province, there are 59 QTDNDs (including 2 QTDNDs in Tay Thanh commune (Yen Thanh) and Bong Khe commune (Con Cuong) which have just come into operation in 2017. In order for the QTDND system to operate effectively, in recent times, the State Bank of Vietnam, Nghe An Branch, has focused on directing and strictly implementing legal documents of the State, the industry and the province related to the activities of QTDNDs in the area such as: Fully and promptly deploying directives and Circulars of the State Bank of Vietnam; guiding and training QTDNDs in the area to ensure strict and correct implementation; training and guiding the installation of software to implement the new statistical reporting regime according to Circular 35/2015/TT-NHNN of the State Bank; directing QTDNDs to develop staff planning and implement the Congress of members, the Congress of terms combined with perfecting the apparatus, replacing and supplementing personnel of the Board of Directors, the Board of Management control to ensure compliance with the regulations of the State Bank; direct the People's Credit Funds to develop restructuring plans for the period 2016 - 2020 in line with the actual situation of each fund, focusing on the contents of perfecting the apparatus, improving the capacity of governance, operation and control; maintaining good safety ratios in operations; handling bad debts, balancing the ratio of capital sources and reasonable use of capital; increasing charter capital, strengthening facilities...; carrying out the work of granting establishment and operation licenses to People's Credit Funds when qualified and linking the licensing work with the results of restructuring, handling bad debts, inspection, supervision and the implementation of recommendations after inspection; directing the funds to review and register training needs to standardize professional titles, improve the qualifications of staff, request the Banking Academy to open appropriate and quality training courses...

Director of the State Bank of Vietnam Nghe An Branch awarded the flag of the leading unit in the emulation movement of the State Bank of Vietnam to the People's Committees of Nghia Thuan Commune (Thai Hoa Town) and Quynh Xuan Commune (Hoang Mai Town). Photo: HV

At the same time, to facilitate the operation of the People's Credit Fund system, the State Bank of Vietnam, Nghe An Branch, has approved many People's Credit Funds to act as remittance payment agents for licensed credit institutions and to provide money transfer services, perform collection and payment services for members through the CF-eBank system of the Cooperative Bank of Vietnam.

Because the People's Credit Fund operates in a large area (in 143 communes and wards) with a total of more than 112,000 members, the State Bank of Vietnam, Nghe An Branch, pays great attention to the inspection, examination and supervision of the activities of the People's Credit Funds to ensure the safe and healthy operation of the system. Every year, the State Bank of Vietnam, Nghe An Branch, develops an inspection and examination plan and conducts inspections and examinations of the activities of the units. In 2016, 18 inspections and 13 examinations of the People's Credit Funds in the area were conducted, 210 recommendations and 2 recommendations were issued to the units to rectify existing problems and violations in all aspects of operation. Based on the results of annual supervision, inspection and examination, the State Bank of Vietnam, Nghe An Branch, has issued documents to rectify the operations of credit institutions with high bad debts, rectify treasury safety work, warn of violations of information reporting work; rectify organizational structure and operations, network expansion; warn of risks of various types of crimes in the banking system, ensure compliance in monetary and banking activities, etc. In addition, funds with a total capital of over 50 billion VND are audited annually, which has also supported large-scale credit institutions in preventing, detecting and promptly handling risks in operations.

QTDND Hung Dong (Vinh City) does a good job of mobilizing capital to meet members' borrowing needs. Photo: HV

With the efforts of the staff of the People's Credit Funds and the attention and direction of the State Bank, leaders of local Party committees and authorities, and the capital regulation support of the Cooperative Bank, the People's Credit Fund system in the area continues to operate stably, in accordance with its purpose, safely and effectively. Currently, the general capital structure of the People's Credit Funds in the whole area is quite suitable, with total mobilized capital reaching VND 4,447 billion (mainly term deposits) and total outstanding debt reaching VND 4,466 billion (of which bad debt accounts for 0.6%); all People's Credit Funds operate profitably, are annually classified by the State Bank of Vietnam Nghe An Branch and approved by the State Bank of Vietnam, so far there have been no weak People's Credit Funds in the area. The People's Credit Funds fully and seriously participate in deposit insurance and preservation funds for the Cooperative Bank in accordance with the provisions of law. Most of the Funds have proactively provided capital for credit investment. Many People's Credit Funds in the area have mobilized good capital to meet the borrowing needs of members and deposited large balances at the Cooperative Bank, such as People's Credit Funds: Thai Hoa, Nghia Thuan, Hung Dong, Van Dien, Do Thanh, Quynh Hau, Nam Trung, Thinh Son... At the same time, the Funds have done a good job of propaganda, consulting, guiding members to use capital for the right purpose, with high efficiency; promptly encouraging, visiting, and rewarding members.

QTDND is an economic model operating under the Law on Cooperatives and the Law on Credit Institutions with the goal of mutual assistance among members of the fund, having a close relationship with the local authorities at the commune level. This model has been recognized and highly appreciated by the Standing Committee of Nghe An Provincial Party Committee and in Directive No. 10-CT/TU dated April 13, 2014, the Standing Committee of the Provincial Party Committee directed all levels and sectors to continue to support and create conditions for the QTDND system in the area to develop in order to help people in rural areas, especially in remote areas, access banking services, contributing to improving their lives and building new rural areas...

HV