On October 18, 2022, at the headquarters of the State Bank of Vietnam (SBV), the Vietnam Banks Association and the SBV Department of Credit for Economic Sectors co-organized a Workshop on "Consumer Finance – An Effective Capital Channel for Disadvantaged People". First Deputy Governor Dao Minh Tu attended and delivered a keynote speech at the Workshop.
SBV First Deputy Governor Dao Minh Tu speaks at the Workshop
Developing consumer finance - One of the major policies of the banking system
In his opening speech at the Workshop, Deputy Governor Dao Minh Tu stated that consumer finance has received a lot of attention by the leaders of the Party, the State, the Government, the relevant Ministries and agencies. In the National Financial Inclusion Strategy until 2025, Vision to 2030, the Prime Minister had requested to develop consumer loan products which are suitable to the target consumers with reasonable interest rates, contributing to preventing black credit.
An overview of the Workshop
The development of consumer finance has been recognized through not only the increases in its size and growth rate, but also the positive effects on the socio-economy. At present, there are 16 finance companies licensed by the SBV, with 17 branches, 41 representative offices, and 74,000 service points, serving about 30 million customers nationwide.
As of September 30, consumer loan outstanding of the finance companies reached about VND 145 trillion, up by over 20% as compared to that of the end of 2021, accounting for nearly 6% of the consumer loan outstanding of the whole banking sector, and 1.3% of the total loan outstanding of the whole economy.
The Workshop was an opportunity for the participants to discuss the roles of consumer finance and the effective implementation of the objectives and orientations of the Government and the SBV for consumer finance. In that spirit, Deputy Governor Dao Minh Tu suggested that the Workshop focus the discussion on the performance of consumer finance, the opportunities for its development, as well as the difficulties and challenges, and the development trends of consumer finance.
Improving the efficiency and the quality of consumer finance
In her presentation at the Workshop, Ms. Pham Thi Thanh Tung, Deputy Director General of the SBV Department of Credit for Economic Sectors, emphasized that, over the past time, the SBV has implemented multiple solutions to promote consumer credit, contributing to limiting "black credit”, such as: improving the legal frameworks for consumer credit; constantly directing the credit institutions to expand and diversify their banking products and services, providing credit with reasonable interest rates, and simplifying the lending procedures to facilitate the people’s access to credit through official channels, especially for those in the rural, remote and isolated areas; developing a network to increase the people's access to credit and meet their legitimate demands; strengthening the communication activities on lending mechanisms and policies, as well as the banking services to the people; actively implementing the solutions to support the COVID-19 affected workers and customers.
As of September 30, 2022, the credit outstanding of the whole economy reached nearly VND 11,600 trillion, an increase of 10.9% as compared to that of the end of 2021. The consumer loan outstanding reached about VND 2,420 trillion, up by 16% as compared to that of the end of 2021, accounting for nearly 21% of the total loan outstanding of the economy, with the participation of 84 credit institutions.
In order to further promote the credit operations to meet the legitimate consumption needs of the people, contributing to preventing and limiting "black credit", according to Ms. Tung, in the coming time, the SBV would continue to review and improve the regulatory frameworks on the lending activities and consumer credit; improving the legal corridor to provide guidance for the application of information technology and the digitization of consumer credit; continuing to create favorable conditions for the credit institutions to develop and expand consumer credit in a healthy manner; strengthening the inspection, supervision and risk management over consumer credit to ensure the safe and sound operations of the credit institutions; promoting the communication on the mechanisms and policies to all people, helping the people and businesses to understand about the benefits of using the formal credit channels, as well as the consequences of "black credit".
Le Hang