On May 17, 2024, in Hanoi, the State Bank of Vietnam (SBV) organized a Seminar themed "Microfinance for Financial Inclusion Development: Current Status and Solutions". The Seminar was chaired by First Deputy Governor Dao Minh Tu with the participation of nearly 100 participants from the Ministries, agencies, microfinance institutions (MFIs), associations, businesses, as well as various experts and scientists…
Microfinance contributes to poverty reduction, and promotion of financial inclusion
Delivering his opening speech at the Seminar, Deputy Governor Dao Minh Tu affirmed that from the practical situations in various countries, microfinance can contribute to poverty reduction, and to the promotion of financial inclusion.
In Vietnam, the Development Strategy of Vietnam’s Banking Sector until 2025, with orientations to 2030, issued at Decision No. 986/QD-TTg dated August 8, 2018 of the Prime Minister, sets out the following tasks: “Continue to create mechanisms to encourage and support the development of microfinance institutions; increase the number of microfinance institutions in order to improve the customers’ access to financial services; and support the implementation of the National Financial Inclusion Strategy”.
An overview of the Seminar
Implementing the above tasks and solutions, the microfinance sub-sector has made remarkable development. Currently, there are 4 MFIs and 79 microfinance programs/projects that have been licensed by the SBV; The number of customers of the 4 MFIs has reached 500,000; the total assets, charter capital, and shareholders' equities of the 4 MFIs have reached VND 10,380 billion, VND 1,060 billion, and VND 2,444 billion respectively.
The SBV Deputy Governor complimented the organization of the Seminar on "Microfinance for Financial Inclusion Development: Current Status and Solutions". “This is an opportunity for the authorities to listen to the exchanges, opinions and policy recommendations raised by the experts, scientists, microfinance institutions, microfinance programs and projects, providing more scientific and practical evidence for improving the mechanisms and policies in order to create more favorable conditions for the microfinance operations in the coming time, contributing to the successful implementation of the objectives set out in the National Financial Inclusion Strategy", said the Deputy Governor.
Microfinance is a pillar to promote financial inclusion
According to Mr. Pham Minh Tu, Deputy Director General of the Banking Strategy Institute under the SBV, in Vietnam, microfinance is identified as a pillar to promote financial inclusion.
The operating networks for microfinance are close to the people, providing good services and meeting quickly the demands of the poor, the low-income people, the disadvantaged people and women living in rural, remote, and isolated areas, etc., thereby contributing to expanding the access and the use of financial services among Vietnamese citizens.
At the Seminar, the experts, scientists and the regulators focused on discussing 3 topics: analysis of the general theoretical issues about the role of microfinance in promoting financial inclusion; the xperience from some countries in developing this type of operations; proposing solutions and recommendations to amend, supplement and improve the current regulations for microfinance development in the coming time.
The participants at the Seminar
Continuing to facilitate microfinance development in the coming time
In his closing speech at the Seminar, First Deputy Governor Dao Minh Tu assessed that the Seminar had produced a panoramic and comprehensive picture of the role of microfinance in promoting financial inclusion.
According to the Deputy Governor, in the coming time, it is necessary to review and improve the legal framework on the MFIs’ operations.
Besides, to improve the operational capacity of the MFIs, the microfinance programs and projects, according to the Deputy Governor, it is necessary to increase the MFIs’ funding from the shareholders’ equity, domestic investment, bonds and foreign investment. Moreover, the MFIs must improve their risk governance capacity through developing and improving their risk management systems and internal regulations related to risk management,…
The MFIs also need to enhance the application of technology in developing and diversifying their products; simplifying the procedures and strengthening the cooperation with the commercial banks, fintech companies to enhance the application of technology, including: eKYC, SMS banking, Homebanking, Mobilebanking, etc., to make it more convenient for their customers.
In addition to that, the MFIs also need to strengthen the education and communication activities on financial knowledge for their customers and the people to help them manage and use financial resources efficiently, towards the goal of financial sustainability; continue to encourage the development of the model of operational linkages between the commercial banks with the MFIs, the microfinance programs/projects, in which the banks can be the providers of credit resources to the MFIs or the microfinance programs/projects.
HY