Gov’t takes bold measures to ensure safety of finance system

Monday, Mar 25, 2019 08:33

There were 1,181 people’s credit funds operating in 57 cities and provinces by the end of June last year.—VNA/VNS Photo

Poorly-performing State-owned people’s credit funds – a type of credit institution focusing on people in rural areas to help them escape poverty and avoid dependence on loan sharks – will be merged, acquired or dissolved to ensure the safety of the country’s finance and banking system.

The plan was part of a directive released last week by Prime Minister Nguyen Xuan Phuc to enhance the operational effectiveness of the country’s people’s credit funds with an aim to meet targets set in the Government’s project on restructuring credit institutions in association with the settlement of non-performing loans (NPLs) in the 2016-20 period.

The move was made as there are still several poorly-performing people’s credit funds in some locations, which were having an adverse impact on the safety and development of people’s credit funds in particular as well as the finance and banking sectors in general.

However, Phuc also noted the bold measures must be implemented prudently to ensure legitimate interests of depositors and maintain the stability and safety of the finance and banking system.

Under the directive, PM Phuc instructed the State Bank of Viet Nam to enhance the supervision as well as assessment and classification of the funds so that measures can be taken to deal with subpar performance according to the Government’s scheme on strengthening and developing the system of people’s credit funds until 2020.

He also asked relevant ministries and agencies in cities and provinces nationwide to implement measures to restructure the funds according to the project on restructuring credit institutions.

Specifically, they must continue to improve and strengthen the safety and effectiveness of the existing people’s credit funds as well as creating new ones in rural areas.

The Government has focused on the establishment of people’s credit funds, especially in remote and rural areas, which lack access to banking services.

The funds help mobilise capital and lending to people in rural areas, contributing to the eradication of hunger, reduction in poverty and dependence on loan sharks.

According to the SBV’s report, there were 1,181 people’s credit funds operating in 57 cities and provinces by the end of June last year. The funds provided services for nearly 1.6 million customers. — VNS

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