Implementing credit policy for students at Vietnam Bank for Social Policies

3.2.2.4. Strengthening and perfecting the Savings and Loan Group

After ten years of operation under the limited staffing conditions of the Social Policy Bank, the Savings and Credit Group model has become extremely important, with 6/9 stages of the Social Policy Bank being entrusted to associations and unions. Therefore, to improve the effectiveness of lending activities for students in difficult circumstances of the Social Policy Bank, consolidating and perfecting the Savings and Credit Group is a very important task. To do this, the Social Policy Bank needs to focus on the following basic solutions:

- Thoroughly grasp and rectify the activities of the Savings and Credit Group according to the content of Decision No. 783/QD-HDQT dated July 29, 2003 of the Board of Directors of the Social Policy Bank: The Savings and Credit Group includes members who are beneficiaries of policies residing in residential areas within the village level, established by socio-political organizations. The Savings and Credit Group performs the tasks of operating a number of stages in the lending process, specifically: Receiving loan applications from borrowers, organizing meetings to publicly review the list and submit them to the Commune People's Committee for approval; sending the dossier approved by the Commune People's Committee to the Bank where it serves for approval; when there is a disbursement notice from the Bank, notifying the borrower to come to the Bank's transaction location to receive the loan, repay the debt, pay interest on time or the Head of the Savings and Credit Group directly submits the interest earned during the period to the Bank (if authorized to collect interest, stated in the trust contract signed with the Group); Regularly inspect and supervise loan group members to use loans for the right purposes; promptly detect debts used for the wrong purposes, debts with unavoidable risks to notify Bank staff at monthly meetings to make minutes for handling according to regulations.

- In the village, there are many households that are eligible for loans and have the need to establish many groups. The VBSP will negotiate with socio-political organizations to encourage many associations to establish groups to create rich competition content for the activities of associations and unions in the village. Members of the Savings and Credit Group do not necessarily have to be members of the association (for example: Youth Union).

If a youth sets up a group, its members can be women, farmers or veterans, as long as the borrower trusts them and voluntarily joins; if the Youth Union sets up, manages and supervises, that group is the Savings and Credit Group of the Youth Union.

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- The Standing Committee of the commune-level association and mass organization (Chairman, Vice Chairman, Standing Member) cannot concurrently participate in the Management Board of the Saving and Credit Group or the Head of the Saving and Credit Group. The management function must be separated from the operational management function of the Saving and Credit Group. The Standing Committee of the commune-level association and mass organization must not appoint the branch heads at the village level as the Head of the Group; all forms of small groups within large groups must be terminated (large groups are organized by commune-level associations and small groups are organized by village branches). The evaluation of the Management Board of the Group and the Head of the Saving and Credit Group must be voted and elected by the group members.

- Banking units should reorganize and consolidate the Savings and Credit Groups by village to implement lending with the number of members ranging from 35 to 50. The Savings and Credit Groups must have a Management Board of 2 to 3 people who know how to keep books. The Savings and Credit Groups must have such a number of members so that the income from commissions paid by the Social Policy Bank will be significant and they will be more attached to the activities of the group. Except for some remote areas and communes where the number of households in the village or hamlet is small and the villages are very far apart; the reorganization of the Savings and Credit Groups must also include the election of the Group Leader and the Management Board so that the group can carry out its tasks. The Bank will coordinate with commune-level associations to guide the Savings and Credit Groups to select a person with sufficient capacity and prestige to be the Group Leader. The commission service fee paid by the Social Policy Bank to the Savings and Credit Group is the income that belongs to the Group's sole use. In addition to being used for the Group's general living expenses, the majority (80% - 90%) is used to compensate the Group's Management Board. The Savings and Credit Groups that receive the handover from the Bank for Agriculture and Rural Development, those that have not yet been reorganized, must immediately proceed with the arrangement according to the above contents. They must not be frozen so that there is no Loan Group to monitor and collect debts.

3.2.2.5. Strengthen information and propaganda work on loan policies for students in difficult circumstances.

Widely announce the credit program for students in difficult circumstances and the process of borrowing training credit.

Strengthen propaganda in specialized magazines and newspapers such as: banking magazine, economic times, banking times..., in addition, propaganda in newspapers and magazines that people are often interested in such as: Nhan Dan, Tien Phong, Phu Nu..., and mass media: TV, radio... Propaganda right at the bank by arranging for customers to pay attention to

Observe the images of the bank, directly contact the staff, tools, equipment... to create trust, safety, comfort, and convenience for customers when coming to transact.

Provide timely information to the Ministry of Education and Training, the Ministry of Labor, War Invalids and Social Affairs and have a mechanism to inform schools about the number and list of students who are eligible for loans to coordinate in understanding the situation of loan use, information about subjects who are not eligible for loans (stopped studying, dropped out of school, disciplined, etc.) to recover debts later.

3.2.2.6. Solutions on facilities and information technology

Regarding the application of information technology: Coordinate, manage and effectively exploit the features of the student loan website ( www.moet.gov.vn ), disseminate the website address to a large number of households and students so that borrowers can fully and promptly update information about the student loan program, actively support the management and supervision of the program's implementation in accordance with Government regulations.

There is a plan to equip and apply information technology to the operations of the Social Policy Bank according to the Banking Information Technology Modernization Project, replacing the current manual technological process and low labor productivity. In addition, with the characteristics of the Social Policy Bank being transactions at the commune and at the Transaction Office, the Center Modernization Project will have to be associated with the modernization of the facilities, gradually computerizing.

activities of the Social Policy Bank to each transaction point. This is an important turning point in the effort to improve the quality of customer service and improve management and operation activities, modernize banking operations according to international standards of the Social Policy Bank. Deploying a modern information technology system brings practical efficiency to both borrowers and the Social Policy Bank. Policy beneficiaries are better served, waiting time is shortened and effort is saved. As for the Social Policy Bank, innovating the information technology system means innovating and tightening the management work of the Social Policy Bank because the new information technology system is highly secure, data management is logical and centralized, user authorization is clear, and input and output data sources are strictly managed, thus minimizing errors and risks during the operation process.

Regarding investment in infrastructure: The infrastructure and equipment system serving the operation of the branches of the Social Policy Bank nationwide is still very rudimentary and lacking, greatly affecting the working efficiency of employees and causing inconvenience to the people. Therefore, in the coming time, the Social Policy Bank needs to step up planning, arranging and calculating reasonable capital sources to attract investment funding support from authorities at all levels, gradually upgrading infrastructure and purchasing equipment for branches and transaction offices of the Social Policy Bank.

3.2.2.7. Strengthening inspection and examination work

Inspection and examination work is an indispensable activity in policy implementation; Ministries and branches involved in implementing credit policies for students establish inspection committees and inspection teams to conduct regular, continuous and ad hoc inspections of savings and credit teams. Inspection contents include: policy subjects, lending procedures, disbursement progress and amount, loan applications, etc.

3.3. Recommendations

3.3.1. Recommendations to the Government

The State needs to promulgate the Law on CSTD to legalize CSTD-related activities, and at the same time further demonstrate transparency.

transparency in credit institutions, high socialization of activities of the People's Credit Fund.

Resolutely and deeply direct Ministries, Branches, People's Committees of provinces and centrally run cities to effectively implement training loan policies for students.

Direct relevant agencies to provide financial resources for organizing student loans: Deposits from State-owned commercial banks (2% deposits) account for a large proportion of the total capital of the Vietnam Bank for Social Policies and ensure the stability of the capital of the Vietnam Bank for Social Policies.

The Government needs to continue to maintain payment deposits for all credit institutions, regardless of economic sectors, considering this as the contribution of these organizations to poverty reduction and social stability.

Adjust the loan amount to suit the new situation: Due to the current economic conditions of high inflation and rising costs, for students to have the funds to cover necessary needs for studying is from 2 million VND/month.

Continue to remove difficulties and obstacles to create a stable and sustainable source of loan capital for the Program.

Supplementing loan subjects for families with 02 or more students studying at schools and training facilities that are not yet eligible for loans.

Continue to extend debt repayment for students who have not found jobs and are unable to repay their debts while their families are still poor or in difficult circumstances.

3.3.2. Recommendations to ministries, branches and local authorities

3.3.2.1. For the State Bank

The State Bank needs to increase capital support for the VBSP through lending. In the immediate future, to have enough capital to lend to the poor and other policy beneficiaries, the State Bank needs to research and soon have a lending mechanism for the VBSP with preferential interest rates and reasonable loan terms, helping the VBSP to be able to maximally meet the capital needs of customers who are policy beneficiaries.

3.3.2.2. For the Ministry of Finance

Innovation of the current financial management mechanism for the VBSP: The current financial management mechanism of the Ministry of Finance reflects the subsidy nature of the State budget and is rigid, not encouraging dynamism and creativity in the financial activities of the VBSP. Implementing the mechanism of interest rate compensation from the State budget will create a subsidy nature and reliance on the State budget, not encouraging increased dynamism and creativity in the financial activities of the VBSP and creating a burden for the State budget itself. Therefore, it is necessary to innovate the State budget compensation mechanism by providing charter capital and temporarily idle capital sources of the State budget for banks to use.

Changing the management cost allocation mechanism for the Social Policy Bank: the application of the management cost allocation mechanism for the Social Policy Bank is based on the average annual loan balance. This does not encourage active debt collection and interest collection, but only focuses on disbursing as much as possible. Therefore, it is necessary to apply the management cost allocation mechanism for the Social Policy Bank based on the total actual interest collected. This method has the following advantages: (i) the State budget does not have to subsidize the annual management fee for the Social Policy Bank (more than 1,000 billion VND per year) because the Social Policy Bank covers its own management costs with the interest collected; (ii) it encourages the Social Policy Bank to have effective measures to improve credit quality and urge customers to repay debts and interest.

3.3.2.3. For the inter-sectoral Ministry of Education and Training, Ministry of Information and Communication, Ministry of Labor - Invalids and Social Affairs and Vietnam Bank for Social Policies

Continue to study and perfect the credit policy mechanism for students, perfect the process of organizing loan confirmation of schools and People's Committees at commune and ward levels for borrowers, and study and supplement regulations related to sanctions for violations.

Close coordination and information sharing between training schools, the People's Credit Fund, and local authorities to simplify and streamline procedures.

loans and facilitate monitoring of the use of credit and training loans of students.

There is an announcement of information on training credits in the new school year to the Departments, universities, colleges, vocational colleges, high schools and junior high schools.

3.3.2.4. Recommendations to local authorities

Directing the Board of Directors' Representative Board at the local level to strengthen the inspection and supervision of CSTD activities for students and other policy beneficiaries in accordance with the Government's policies. With the organizational structure, enhancing the role and responsibility of the Board of Directors of the Social Policy Bank at the city, district and county levels in accordance with the regulations on organization and operation; at the same time, taking measures to consolidate and enhance the role of the Poverty Reduction Board and mutual support organizations, thereby supporting the Social Policy Bank to quickly and accurately reach each household in difficult circumstances.

3.3.2.5. For organizations that receive loans from students

Organizations that receive the trust of the VBSP to lend to the poor need to have a program to inspect and supervise grassroots socio-political organizations in implementing the trust service contract. Improve vocational training; integrate economic, cultural and social programs with credit programs; organize vertical information synthesis, summarize and review movements to promptly encourage good people and good deeds and have strong enough solutions to direct, educate and deter acts of intentionally embezzling credit capital.

3.3.3. Recommendations for other units

It is recommended that ministries, central agencies, corporations, groups and enterprises have policies to prioritize job creation, recruitment and employment of students from poor households and households in difficult circumstances. Pay attention to research and investment in housing construction projects for students to rent, first of all for students in difficult circumstances.

Propose relevant sectors, mass organizations, Vietnam General Confederation of Labor, Vietnam Fatherland Front, press agencies, and social work organizations to create favorable conditions, support, and coordinate propaganda programs to implement the State's preferential student loan policy more widely.

Propose that the Ethnic Committee develop and submit for promulgation additional policies to support learning for children of poor households, poor people, ethnic minorities in communes, villages, and hamlets with special difficulties in ethnic minority and mountainous areas; ethnic minority groups, and people in particularly difficult areas.

Implementing credit policy for students at Vietnam Bank for Social Policies - 13

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