VBSP's functions:

Mobilizing capital at home and abroad with interest payment from all organizations and individual in the form of demand deposits; savings from the poor.

Issuing Government-guaranteed bonds, deposit certificates and other valuable papers; borrowing from financial and credit organizations at home and abroad; borrowing from Postal Savings Company, Vietnam Social Insurance and the State Bank.

Receiving voluntary non-interest or non-refundable funds of individuals; economic, financial and credit institutions; and socio-political organizations, associations, non-governmental organizations at home and abroad.

Opening payment deposit accounts for all clients locally and abroad.

Having its own internal payment system and participates in the domestic Interbank system.

Providing banking services on payment and treasury:

• Supplying means of payment.

• Implementing domestic payment services.

• Providing services including collection and authorized payment by cash or not by cash.

• Other services regulated by the Governor of the State Bank.

Extending short-term, medium-term and long-term loans for the purpose of production, business, job creation and living standard improvement, contributing to the National targeted program on poverty reduction and social stability.

Carrying out entrusted lending services from International organizations, nations, individuals at home and abroad in accordance with Trust Contracts

Signing Ceremony on Finance Agreement of Coastal Wetlands protection and development project between VBSP and Ministry of Finance (11/2004)

SERVICE OBJECTS:

LENDING PROCEDURES - POLICY BENEFICIARIES WORKING OVERSEAS FOR DEFINITE TERMS

Condition for borrowings:

- Households have permanent residence in localities where they borrow capital;

- Households are included in the List of Poor Households at commune/ward/town under the poverty standard publicized by the Prime Minister from time to time;

- The borrowing poor households are not required to have collaterals and are exempted from administration fees upon conditions that they are members of and proposed by credit and savings groups;

- The heads of the Households or their inherits to be authorized transaction delegate  is the representatives of family to take all responsibility in all relations/transaction with VBSP, is the person to directly sign the loan agreement and make repayment installments.

Borrowing duration:

- Short-term loans: up to 12 months (01 year)

- Medium-term loans: from over 12 months to 60 months (5 years)

- Long-term loans: over 60 months

Loan amounts:

The loan amount is based on borrowing demands, contribution capital and repayment ability of a household; the maximum loan limit to a household is decided and publicized periodically by the VBSP’s Board of Directors. The current maximum loan limit to a household is as follows:

1. Production, business and services: no more than VND 30 million/household

2. Meeting partly needs for housing, electricity, safe water and schooling:

-  House repair: no more than VND 03 million/household

-  Electricity  equipment: no more than VND 1.5 million/household

-  Safe water: no more than VND 4 million/household

-  Partial support of the tuition fees for the high school students: the General Director authorizes Directors at provincial branches to make decision based on 4 items: tuition fees, fee for building schools, book and uniform expenses.

Interest rate

-  VBSP applies the preferential interest rates decided by the Prime Minister for each period. Currently, the interest rate for the poor households  is 0.65% per month;

-  The overdue debt interest rate is 130% of contract rate.

Borrowing procedures

Poor households

- Volunteer to join a Savings & Credit Group.

- Poor households write a request for borrowing (in the form made by VBSP) to submit to the leader of the Savings & Credit Group

- When doing transactions with the bank, the heads of household or their legal inherits, who are the authorized household delegates, must show their identification cards; in case of no identification cards, they must have their photos pasted in the Savings and Lending Books to be eligible to receive the loans.

Savings & Credit Group

- Receive the requests for borrowing from the poor households.

- Hold the group meetings to select the poor households eligible for borrowing, prepare the list of borrowers enclosed with the request for borrowing submitted to the Commune People’s Committee; households must be verified as poor ones according to the poverty line, have permanent residence registration in the localities, and are approved in the List of Poor Households by the local Commune People’s Committee before submitting to the bank.

- Announce to households about the results of the approved list of the borrowers, the schedule and location of disbursement.

- Coordinate with the bank to disburse loans directly to each borrowing household.

Poor households are not eligible for borrowing

- Poor Households do not have labor capacity, single households in the period of court case execution or poor households being certified by local government to be out of borrowing list because of committing social evils such as gambling, drug addiction, stealing, and laziness.

- Poor households belonging to other social policy groups: single old persons, incapability, hunger poverty dependant on the State budget grant.

Diagram of poor household lending procedures.

Note:

1. Poor households write the requests for borrowing and submit it to the Savings & Credit Group

2. Savings & Credit Group selects the households to be entitled to borrow and submits the list of borrowers to the Poverty Reduction Board and Commune People’s Committee.

3. The Poverty Reduction Board and the Commune People’s Committee certify and pass the list of poor households to the bank for consideration.

4. The bank approves and announces to the Commune People’s Committee about the results of the approved list of borrowers, the schedule and location of disbursement.

5. Commune People’s Committee announces the bank’s results to Mass Organizations.

6. Mass Organizations announce the approved results to the Savings & Credit Groups

7. The Savings & Credit Groups announce the approved results to poor households; also announce the schedule and location of disbursement.

8. The bank together with the Savings & Credit Groups directly disburses loans to borrowing households.

LENDING PROCEDURES - POLICY BENEFICIARIES WORKING OVERSEAS FOR DEFINITE TERMS

Condition for borrowings:

To be eligible for borrowing, borrowers must satisfy the following conditions:

- Have civil legal capacity and capacity for civil acts; be responsible to laws;

- Have permanent residences at location of the Bank’s offices;

- Have certification from the local government agencies that borrowers are policy beneficiaries;

- Be officially recruited to go working abroad for definite terms;

- Laborer or his/her households have no non-performing debts or over-6-month overdue debts.

Purpose of borrowings:

VBSP provides loans for borrowers to cover such eligible fees and expenditures as: Training fees; contract consulting fees; deposit; one way ticket from Vietnam to the country in which the laborer will work; other expenditures as stated in labor contract.

Loan amounts:

The maximum loan amount is 100% of the eligible fees to be paid but not more than VND 20 million per individual working overseas for definite terms.

Interest rate

Currently the interest rate applied to the policy beneficiaries who go working abroad for definite term is 0.65% per month; The interest rate on overdue debt is 130% of the contract rate.

Summary of lending procedures

Borrowers

- Submit a request for borrowing that is certified by the local government agencies certifying the borrowers as policy beneficiaries

- Submit a contract signed with the recruiters

The Bank  

- Appraisal, re-appraisal of the conditions for borrowing (if any), credit approval;

- VBSP shall transfer money to the recruiters after borrowers have signed the loan contracts with the bank or directly disburse the loans to the borrowers upon the writing request of the recruiters.

Diagram of lending procedures.

Note:

1. Borrowers submit to VBSP:

- Submit a request for borrowing that is certified by the local government agencies certifying the borrowers as policy beneficiaries

- Submit a contract signed with the labor recruiters

2. VBSP  make appraisal, re-appraisal (if any) and credit approval

3. VBSP  transfer loans to the labor recruiters after the borrowers have signed the loan contracts with the bank or directly disburse the loans to the borrowers upon the writing request of the labor recruiters.

LENDING PROCEDURES - JOB CREATION

Eligible borrowers from Job Creation Fund:

- Individual business households; production cooperation groups; cooperatives operating under the Cooperative Law; production/ business units established by the disabled; small and medium size enterprises operating under the Enterprise Law; farm owners; education, labor and social affair centers (abbreviated as production/ business units).

- Households

Condition for borrowings:

Production/ business units:

- Have feasible capital borrowing projects suitable to production and business licenses, creating new jobs and attracting more laborers working on a stable basis;

- Their project must be certified by the local government of places where such  project are to be implemented;

- Have property for mortgage or pledge as regulated by laws.

Households

- Have permanent residence registration in localities where they borrow capital for project implementation;

- Ensure that at least one new job is created;

- Their projects must be certified by the local government of places where such projects are to be implemented

Purpose of borrowings:

- Procurement of supplies, machinery, equipment, expanding workshops; Means of transport, means of catching aquatic and marine creatures in order to expand and raise the production and business capacity;

- Procurement of raw materials, animals and plant varieties; payment for the production and business services.

Loan amounts:

- For production/ business units, maximum loan amount is VND500 million per project;

- For households, maximum loan amount is VND20 million per household.

Interest rate

- The lending interest rate is at 0.65% per month; borrowers who are disable people  enjoy the interest rate of 0.5% per month.

- Default interest rate is 130% of in due rate

Procedures of the project preparation, project appraisal, lending decision and disbursement.

Project preparation 

When in need of loans, potential borrowers have to write projects, prepare credit files under guidance of the Labor, War Invalids and Social Affair Department and the Program Implementation Agencies at district/ provincial level

Capital borrowing project appraisal and lending decision

VBSP shall coordinate with the Labor, War Invalids and Social Affair Department and the Program Implementation Agencies at district/ provincial level to appraise and submit to the authorize agencies for project approval. 

Disbursement

When receiving credit approval decisions from authorized agencies, the Bank will provide guidance for borrowers to complete their credit files and carry out mortgage procedures as stipulated by prevailing law and then directly disburse the loans to the borrowers.