Decision No. 852/QD-TTg dated July 10, 2012 of the Prime Minister approving the development strategy of the Vietnam Bank for Social Policies during 2011-2020

THE PRIME MINISTER

Decision No. 852/QD-TTg of July 10, 2012, approving the development strategy of the Vietnam Bank for Social Policies during 2011-2020

THE PRIME MINISTER

Pursuant to the December 25, 2001 Law on Organization of the Government;

Pursuant to the Government’s Decree No. 78/2002/ND-CP of October 4, 2002, on credit for the poor and other policy beneficiaries;

Pursuant to the national strategy for socio-economic development during 2011-2020;

At the proposal of the Vietnam Bank for Social Policies in Documents No. 103/TTr-NHCS of July 21, 2011, No. 38/BC-NHCS of January 13, 2012, and No. 1878/BC-NHCS of May 24, 2012,

DECIDES:

Article 1. To approve the development strategy of the Vietnam Bank for Social Policies during 2011-2020, with the following contents:

1. Social policy credit is a solution to achieving the target of basically and sustainably reducing poverty and therefore should be implemented actively and effectively.

2. To raise the operational capacity of the Vietnam Bank for Social Policies to make it truly an effective instrument for implementing the State’s credit policy on support for fast and sustainable poverty reduction in the socialist-oriented market economy, contributing to successfully implementing the 2011-2020 socio-economic development strategy, the sustainable poverty reduction program to 2020 and the national target program on building a new countryside during 2010-2020.

3. To uniformly promulgate socio-economic development programs involving social policy credit and allocate adequate resources for their implementation.

4. Overall objective

To stably and sustainably develop the Vietnam Bank for Social Policies which is capable of properly implementing the State’s social policy credit, in association with developing more effective support services for the poor, near-poor households and other policy beneficiaries.

5. Targets

a/ All eligible poor people and other policy beneficiaries who have borrowing needs will have access to products and services provided by the Vietnam Bank for Social Policies.

b/ The outstanding debts will annually grow at around 10%.

c/ The rate of overdue debts will be below 3% of the total outstanding loans.

d/ To simplify procedures and standardize the professional operation process.

e/ To diversify products and services.

f/ To modernize professional operations, to integrate with regional and world banking systems.

g/ To complete and promote the effect and effectiveness of the system of risk inspection, control, analysis and warning.

h/ To effectively combine and incorporate social policy credit activities with technical assistance, technology transfer, and industrial, agricultural, forestry and fishery extension activities and activities of socio-political organizations for fast and sustainable poverty reduction and social security assurance.

6. Operational orientations

a/ Customers of the Vietnam Bank for Social Policies are poor people and other policy beneficiaries under state regulations and other borrowers of the Vietnam Bank for Social Policies as entrusted by organizations and individuals. To prioritize ethnic minority people and inhabitants in disadvantaged areas.

b/ To further provide and improve the quality of products and services; and concurrently promote the application of modern technologies and diversify banking products and services such as savings, payment and money transfer.

c/ Financial mechanism

- The Vietnam Bank for Social Policies’s operational capital will be mainly provided by the State and raised by the Vietnam Bank for Social Policies, as well as entrustments of domestic and overseas organizations and individuals under the slogan of “joint efforts of the State, enterprises and the people,” including:

+ Capital allocated by the State, including annually added charter capital corresponding to the credit growth rate assigned by the Prime Minister and loans provided under target programs on poverty reduction, employment and other social policies. To prioritize the Vietnam Bank for Social Policies in taking loans or advances from idle,  low-interest or interest-free capital sources on the basis of balancing budget, ODA, aid or other low-cost funding sources, ensuring the bank’s proactive and stable operations.

+ Funds raised from savings deposits and loans borrowed from domestic and overseas organizations and individuals.

+ Funds entrusted by domestic and overseas organizations and individuals.

+ Money donated and granted by domestic and overseas organizations and individuals and other lawful funding sources.

- To further apply the preferential interest rate suitable to the financial capacity of the State and borrowers in each period. The levels of preferential interest differentiated by target group of beneficiaries will be incrementally reduced and replaced with preferential treatment in borrowing process, procedures and conditions. The highest preferential level will be applied to poor ethnic minority households in specially disadvantaged areas. The interest rate applicable to households which are not poor but entitled to preferential credit policies and near-poor households will gradually approach the market interest rate.

- To handle risks resulted from objective circumstances under state regulations. The Vietnam Bank for Social Policies shall classify debts, set aside credit risk provisions and develop a risk handling process suitable to its particular operations.

- To complete the mechanism of stable package financing in each specified period, to adopt an appropriate offsetting mechanism in order to promote the Vietnam Bank for Social Policies’s proactiveness and enable the assessment of the bank’s operational effectiveness; assure the offsetting of operational expenses under regulations; and assure benefits for the bank’s staff.

d/ Bank governance

- To complete the organizational, administration and management model at central, provincial and district levels toward concentrating uniform management at the central level, reducing intermediary levels and increasing operations at mobile transaction points in communes and wards.

- To consolidate the organization and raise the operational capacity and quality of boards of directors and representative boards of directors at different levels.

- To raise the effectiveness of the credit entrustment through socio-political organizations under the direction and supervision of party committees and local administrations at all different levels, particularly commune-level administrations.

- To build an inspection and supervision system suitable to the Vietnam Bank for Social Policies’s particular operational model. To form an independent internal inspection and control system which is organizationally and operationally uniform. To ensure close coordination between the control board and the internal inspection and control system.

e/ Human resource development

- To attach importance to training and retraining Vietnam Bank for Social Policies staff to improve their professional qualifications, skills and ethics.

To standardize professional qualifications and skills of staff according to state regulations and taking into account the Vietnam Bank for Social Policies’s particular characteristics, mostly operating in deep-lying and remote areas and specially disadvantaged areas. To adopt a mechanism to prioritize recruitment of ethnic minority people and concurrently adopt incentives to attract staff to work in disadvantaged areas, especially poor districts.

- To train staff in charge of entrustment and savings and credit groups in basic knowledge about credit management; inspection and supervision; risk detection and control; counseling and guidance on effective use of loans for the poor and policy beneficiaries.

f/ Modernization of operation

- To increasingly apply modern technology to professional operations of the Vietnam Bank for Social Policies suitable to its operational mode.

- To properly collect, process and store information for management, direction and administration work.

7. Solutions

a/ To complete the legal framework for the operation of the Vietnam Bank for Social Policies on the basis of amending and supplementing some provisions of the law on credit for the poor and other policy beneficiaries.

b/ To consolidate and raise the quality and effectiveness of the organizational apparatus and staff of the Vietnam Bank for Social Policies. To complete the organizational model and raise the operational capacity and effectiveness of the internal inspection and control system.

c/ To raise the role, responsibilities and operational effectiveness of party committees and local administrations at all levels and of socio-political organizations in implementing the social policy credit in order to raise the effectiveness of policy credit operations and the quality of entrustment services.

d/ To consolidate the organization of savings and credit groups, ensuring harmony in organizing savings and credit groups of mass organizations and in residential areas, facilitating the operation of socio-political organizations.

e/ To complete the financial management mechanism for the Vietnam Bank for Social Policies; mechanisms of allocation of  package finance and wage funds for grassroots units and staff; and mechanisms on wage, bonus and benefit distribution to staff suitable to the bank’s financial capacity and operation.

f/ To complete the mechanism on management and handling of risky debts on the basis of building a system of indicators to assess the recovery of due and overdue debts; to study and formulate a mechanism to identify and early warn risks and adopt remedy plans applicable to each type of risk; to classify debts and set up credit risk provisions suitable to the bank’s particular operation.

g/ To increase inspection and supervision of activities of socio-political organizations providing entrustment services, savings and credit groups and the Vietnam Bank for Social Policies and its borrowers’ use of loans.

h/ To increasingly develop physical foundations and information technology. To make use of central and local resources to invest in, upgrade and stabilize the bank’s offices at different levels, warehouses, means of transport, equipment, particularly equipment for the operation of mobile transaction teams and commune transaction points. To concentrate financial and human resources on boosting the implementation of the project to modernize information technology of the Vietnam Bank for Social Policies.

i/ To promote mutual assistance among borrowers, particularly members of savings and credit groups to effectively use loans and fully and timely pay debts.

j/ To increase public information and expand international cooperation to learn and share experiences with other countries, especially regional ones, in micro-finance management for the poor and other policy beneficiaries. To make use of funding sources and technical assistance of international organizations to increase lending sources and train and raise administration capacity for Vietnam Bank for Social Policies staff, organizers of mass organizations providing entrustment services and management boards of savings and credit groups.

Article 2. Organization of implementation

1. Ministries, sectors, local administrations, socio-political organizations and related units and organizations shall assist and create favorable conditions for the Vietnam Bank for Social Policies to implement the Strategy.

2. Ministries and sectors assigned to manage support programs for poverty reduction and social security shall review, amend and supplement or propose amendments and supplements to documents related to social policy credit operations in conformity with this Strategy.

3. The State Bank of Vietnam:

a/ To perform the state management of operations of the Vietnam Bank for Social Policies according to its competence.

b/ To support the Vietnam Bank for Social Policies in raising funds and borrowing loans from the State Bank, to direct state credit institutions (including equitized state credit institutions in which the State holds dominant shares) in maintaining their deposit balances at the Vietnam Bank for Social Policies under regulations.

4. The Ministry of Finance:

a/ To assume the prime responsibility for, and coordinate with related ministries and sectors in, studying, reviewing and completing preferential credit policies for the poor and other policy beneficiaries appropriately.

b/ To arrange adequate resources to assure the Vietnam Bank for Social Policies’s effective implementation of the State’s credit policy for the poor and other policy beneficiaries.

c/ To coordinate with the Ministry of Planning and Investment in appraising annual and five-year credit plans of the Vietnam Bank for Social Policies for submission to the Prime Minister for consideration and decision.

d/ To propose a better financial management mechanism to enable stable and sustainable operation of the Vietnam Bank for Social Policies; to propose the Prime Minister to allocate stable management expense quotas for the Vietnam Bank for Social Policies in each specified period; to supplement the charter capital and offset interest differences for the Vietnam Bank for Social Policies on the basis of approved cost estimates.

5. The Ministry of Planning and Investment shall assume the prime responsibility for and coordinate with the Ministry of Finance in:

a/ Summarizing annual and five-year credit plans of the Vietnam Bank for Social Policies, proposing them to the Prime Minister for  consideration and decision in annual and five-year socio-economic development plans.

b/ Including estimated funds for credit programs for the poor and other policy beneficiaries, offset of interest differences and management expenses, and supplemented charter capital for the Vietnam Bank for Social Policies in annual state budget estimates and proposing them to the Prime Minister for consideration and decision.

6. The Ministry of Labor, War Invalids and Social Affairs:

a/ To coordinate with related ministries and sectors in studying, formulating and submitting for promulgation credit policies for the poor and other policy beneficiaries.

b/ To complete written guidelines for the People’s Committees at all levels to survey, review and promptly supplement lists of poor households, near-poor households and policy beneficiaries as a basis for the implementation of social policy credit programs.

c/ To assume the prime responsibility for reviewing support policies for poverty reduction and social security related to the credit policy for the poor and other policy beneficiaries, which are formulated by ministries and sectors, in order to ensure consistency in terms of beneficiaries and funding sources for program implementation, avoiding overlapping,  coincident or scattered resources which reduce the policy’s effectiveness.

d/ To assume the prime responsibility for, and coordinate with the Ministry of Finance and the State Bank of Vietnam in, assuring that the Vietnam Bank for Social Policies have an appropriate and stable wage mechanism to encourage its staff to permanently work for the sector.

7. The Committee for Ethnic Minorities Affairs shall elaborate and submit for promulgation policies to support poor households and people, and ethnic minority people in specially disadvantaged communes and villages in ethnic minority and mountainous areas; and ethnic minority groups with small population and inhabitants in specially disadvantaged areas.

8. People’s Committees at all levels:

a/ To mobilize resources and direct the implementation of credit-related programs and projects for hunger eradication, poverty reduction and social security in their localities. Annually, to set aside funds from local budget revenue increases and savings to increase loans in their localities under local incentive mechanisms and policies.

b/ To survey and closely manage lists of poor households, near-poor households and other policy beneficiaries. To proactively adjust and promptly supplement these lists as a basis for certification of eligible borrowers of the Vietnam Bank for Social Policies.

c/ To direct the effective incorporation of programs and projects on socio-economic development and hunger eradication and poverty reduction in their localities. To regularly inspect and supervise the management and implementation of social policy credit programs and operations of the Vietnam Bank for Social Policies.

d/ To raise responsibilities of commune-level People’s Committees for implementing the social policy credit policy in their localities; consolidating poverty reduction boards to improve their operational quality in order to properly advise People’s Committees of the same level in managing and approving lists of poor households and policy beneficiaries borrowing loans from the Vietnam Bank for Social Policies; directing heads of villages, hamlets and street residential groups in coordinating with the Vietnam Bank for Social Policies, socio-political organizations and savings and credit groups in closely managing social policy credit in their localities; monitoring and assisting borrowers in using loans properly and effectively; urging borrowers to pay debts and bank interests fully and on time; and actively participating in handling overdue and non-performing debts.

e/ To study and propose to competent authorities the effective implementation of the social credit policy suitable to local socio-economic development conditions and meeting the needs of local people.

9. Socio-political organizations:

a/ To properly perform public information work and participate in the proper implementation of credit policies to support poverty reduction and social security.

b/ To coordinate with local administrations and competent agencies in incorporating programs and projects on production and business, restructuring and selection of plants and livestock and trades, and programs on technology transfer, industrial, agricultural, forestry and fishery extension and market orientation, with the implementation of social policy credit in localities.

c/ To increase inspection and supervision and raise the operational capacity and effectiveness of subordinate socio-political organizations and savings and credit groups in providing entrustment services for the Vietnam Bank for Social Policies. To direct the proper consideration and selection of borrowers, to manage and guide borrowers in effectively using loans and paying debts and bank interests fully and on time.

d/ To proactively train and improve the qualifications of staff engaged in entrustment services and savings and borrowing group management boards through self-training or training cooperation programs with the Vietnam Bank for Social Policies.

10. The Vietnam Bank for Social Policies:

a/ To concretize the Strategy’s contents into annual and five-year programs and plans and effectively implement them.

b/ To issue documents concretizing the viewpoints, objectives, tasks and solutions of the Strategy in each sector, ensuring uniform implementation from the central to local levels.

c/ To proactively coordinate with related ministries and sectors in studying and proposing solutions to implementing the Strategy and measures to tackle difficulties and problems.

d/ To conduct regular review and evaluation of the strategy implementation for reporting to competent authorities. To conduct a final review of the strategy implementation in late 2020.

Article 3. This Decision takes effect on the date of its signing.

Article 4. Ministers, heads of ministerial-level agencies, heads of government-attached agencies, chairpersons of provincial-level People’s Committees, the chairperson of the board of directors and general director of the Vietnam Bank for Social Policies, and heads of related agencies and organizations shall implement this Decision.-

Prime Minister
NGUYEN TAN DUNG