Viet Nam has significant room to promote inclusive finance, given 70 per cent of its population is living in rural areas and many are locked out of the conventional banking system due to low income, experts have said.

However, there were challenges in making banking products and financial services available to the low-income population, especially those living in remote areas, such as poor infrastructure system and preference for cash.

According to Le Phuong Lan, deputy director of the Banking Strategy Institute, inclusive finance aimed at ensuring banking products and financial services provided by official financial institutions were accessible to all segments of the population at reasonable cost, which was critical to reduce poverty and accelerate the country’s economic growth.

A number of programes had been implemented to promote inclusive finance, such as projects to develop cashless payment, micro-finance system development, improving access to banking services, and credit support policies for agricultural businesses, small and medium enterprises, students and poor households, Lan said.

Viet Nam is in urgent need for inclusive finance as the demand for capital was increasing and the non-performing loan ratio at micro-financial institutions and social policy banks was much lower than other places, experts said.

Facts, however, showed that access to banking and finance services was still limited in rural and remote areas.

Statistics by the central bank revealed that the percentage of adults with accounts at official financial institutions increased from 21.3 per cent in 2012 to 30.9 per cent in 2014, still low in comparison with countries such as China with 78 per cent and Thailand with 79 per cent.

Vo Viet Hung, director of the central bank’s Monetary and Financial Stabilisation Department, said management agencies should develop inclusive finance in line with financial stability.

This would require the cooperation of relevant organistions and the application of high technologies to ensure convenience and safety of residents and businesses, Hung said.

Interest rates were not always at the lowest level, Hung said, adding that international experiences had shown that the rates should be competitive to ensure healthy competition among financial institutions.

Phan Cu Nhan of the Viet Nam Bank for Social Policies’ International Integration Department said it was critical to provide training about how to use capital effectively along with promoting inclusive finance in Viet Nam.

Nhan added that banking products should be diversified to meet the abundant demand of low-income earners, together with the application of high technologies, such as mobile banking, to improve access.

The State Bank of Viet Nam was in charge of developing a national strategy on financial inclusion. – VNS