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Vietnamese - Belgian Credit Project
Microfinance in practice
The microfinance model targets poor women with low incomes providing
non - collateral loans through simple and convenient procedures.
Credit and Savings groups
The credit model is based on the Grameen model which uses group
solidarity. Groups are composed of 10 women in a similar socio-economic
position, who know each other and who are willing to support each
other in borrowing loans and following the project regulations.
Each group selects a group leader who receives training to manage
the group. The position of group leaders rotates on a yearly basis.
Centres
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Centre is composed of three groups with 10 members each. Each month
a Centre meeting takes place chaired by an elected centre chief.
The monthly Centre meeting plays a decisive role in the growth and
development of the Centre and in instilling credit discipline among
members. The meeting schedule is fixed and includes disbursement
of loans, collection of loan repayments, interest and savings. It
also provides an opportunity for members to discuss activities,
create close social contacts, discuss needs which can be communicated
to VBCP officers and share information on topics that are not linked
to micro finance (e.g. health, woman emancipation, family planning).
Microfinance products
Loans are provided in combination with savings mobilization. A
mutual fund is also set up to enhance mutual assistance among borrowers.
- Micro-credit
- Savings products:
- Compulsory savings: 5,000 VND/person/month
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Voluntary savings
- Member Mutual Funds:
- Natural Disaster Fund with a fee of 300 VND/person/month
to support project members in case of calamities. This fund
is managed by the provincial PMU. In 1999 and 2000, a series
of floods damaged houses, roads, fields and other facilities
in two of the provinces. This fund was activated to support
its members with a total of 1.3 million VND. By March 2001,
the fund had accumulated to 54.9 million VND.
- Social Fund with a fee of 200 VND/person/month to help borrowers
in case of serious diseases, accidents or death of members
of the family.
Characteristics and principles of the VBCP microfinance model:
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 Targets
poor women with low income, who lack capital but are capable
to develop businesses and production to increase living standards
for themselves and their family.
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Provides non-collateral loans to poor women. The only requirement
being the group guarantee and her willingness to follow project
regulations and membership responsibilities.
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A simple application procedure (one printed Loan Application
Form), quick processing (within one week) and convenience (application
for loans and loan/saving activities are conducted in monthly
centre meetings held in the community).
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Provide small and medium-sized loans with loan terms suitable
to the borrowers' capacity for loan utilization and repayment.
The borrowers can borrow loans for one-year cycles (renewable)
and supplementary loans to scale up their production.
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Apply the system of credit revolving funds. Monthly repayment
of loans enable the borrowers to pay in due time and motivate
them to look for more income-generating activities. At the same
time, as the credit revolving fund operates, it self-generates
and serves more poor people.
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Loans provision in combination with savings mobilization aims
to shape a habit of savings by the borrower for any risk in
the future; at the same time it generates growth and sustainability
in the microfinance project.
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Loans provision through women's groups aims to enhance mutual
assistance among the borrowers. With this approach, the project
fund can be well protected.
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Application of an interest rate equal to the one applied by
commercial banks operating in the rural areas. This approach
aims to cover some necessary expenditures of the project.
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Handover of loan delivery and management to local staff who
have been trained, guided and assisted by relevant PMUs and
a regular reporting system. The VBCP staff members are all local
women who have a good reputation within the community. They
have good relationships and understanding of the needs and capacity
of poor women. Therefore, they were successful in providing
microfinance services to the poor.
Computerising the management system
The financial management has been computerized using the Micro Banker system, i.e. banking software developed by the
Food and Agriculture Organization (FAO). The system was entirely
translated into Vietnamese by the project and adapted to the chosen
credit model. Computers were installed at the provincial offices
of the VWU and connected to the central level of the project. In
the head office the data of the 7 provinces are consolidated. The
Crystal software programme for the Management Information System
(MIS) has been installed, using data provided by the Micro Banker
system and allowing the generation of comprehensive monthly financial
reports including ratios so that appropriate measures can be taken
immediately.
Credit revolving fund
Belgium provided an initial capital of 397,000 EUR in 1999 and
1,500,000 EUR at the end of 2001. The average loan provided to each
commune was 105 million VND during Phase I and is fixed at 130 million
VND for Phase II.
Results
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Total loans disbursed:
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2.6 million US$
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Total number of borrowers so far:
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39 500
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Active borrowers:
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11 921
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Repayment rate:
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99.7%
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Outstanding Loans / Savings Balance
page last updated:29/11/02
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