CENTRE FOR SELF-HELP DEVELOPMENT

Institute of micro-finance and cooperative development.

Check Mail
  • Home
  • News & Events

Learning from Vietnam: Microfinance a Social Activity

CSD organized a week long exposure/study visit of Nepali MFIs to Socialist Republic of Vietnam from August 13 to 20, 2022 to learn the microfinance policies, programs, approaches and  experiences in that country. During the visit, the team visited 3 prominent MFIs of Vietnam located at Hanoi in the North and Ho Chi Minh City in the South.

The first organization visited was the Tao Yêu Mày Tinh Thuong Limited Liability Microfinance Institution (TYM MFI) with 31 years of operational history at Hanoi.  TYM Vietnam is the second largest MFI in terms of members and loan disbursement and also one of few regulated MFIs in Vietnam. It currently operates through 21 branches, 39 transaction offices with a human resource strength of 589 full time staff. The team was welcomed and briefed by TYM officials led by General Director Ms. Pham Thi Thuy Linh.

TYM originally followed Grameen System as it was initiated with the seed fund from Grameen Trust Bangladesh but had modified it to suit the need and demands of the clients. It has set the responsibility for the repayment of loan on the individual borrower not on group.

The next visit of team was the Capital Aid for Employment of the Poor Microfinance Institution (CEP), the largest MFI operating in Vietnam which has its head office at Ho Chi Minh City was founded in 1991 as a non-profit social institution by the Ho Chi Minh City Labor Confederation; a labor trade union affiliated with the Communist Party of Vietnam. CEP mainly serves worker and daily laborer as its client. It offers both savings and loan products through a network of 30 branches, spanning urban areas in Ho Chi Minch City as well as peri-urban and rural areas in surrounding provinces.  Interestingly 80% of its loan product are weekly loan products for unsalaried laborers with variable incomes and the monthly loan products for salaried workers in need of working capital.

The visiting team also visited the program of another MFI in South East province of Ben Tre named “Ben Tre Women's Economic Development Fund (FWED)”. Founded in 2013 by Ben Tre Women’s’ Union; it is a not-for-profit social fund, aiming to provide equal opportunities to access capital support services and transfer science and technology to help support women's economic development. It provides savings as well financial and non-financial support to people from low income household in the province and has significant presence in the Ben Tre Province.

It currently serves both male and female micro entrepreneurs from poor families aged from 18 to 65 years. It also extends loans to members of production and business groups, cooperative groups and production association groups through a network of 9 Branches in the province. Its loans are without any collateral and extended on group guarantees. The loans are extended on the basis of ability to repay and purpose of credit, and the repayment period is from 1 year to 3 years.

In Vietnam all registered MFIs are either NGO-oriented microfinance institutions or microfinance programs and projects run by the Viet Nam Women’s Union and other socio-political organizations. These MFIs do not receive any subsidized loan from Commercial Banks and as a result there is limited access to funds for growth. In addition, regulation has limited microfinance projects and programs from borrowing in foreign currency and the amount of deposits they can mobilize.

In the course of the visit it was learnt that the lending rates in Vietnam is averaged between 18 to 19 % comparatively lowest in South East Asia. It was understood that this is primarily due to low cost of capital as all retained earnings are invested as loans. Also these low rates are not required by regulation, but instead are the result of historical practice as the aim of MFI is to help poor to get out of poverty. There seems to be general lack of a commercial mindset among the MFIs in Vietnam as the existing laws and regulations conceptualize microfinance as a social activity delivered by nongovernment organization (NGOs).

The team comprised of 11 officials from 4 different MFIs, namely: Mr. Tek Bahadur Bohara – Chairman, Mr.Pravin Bhattarai, Mr. Santosh Phuyal and Mr. Sanjaya Kumar Shrestha, board directors from the Mirmire Laghubitta Bittiya Sanstha Ltd.;  Kavreplanchowk, Mr. Sing Bahadur Gurung – Chairman and Mr. Bishal K.C - CEO from the Bauddha Grameen Bahuudeshiya Sahakari Sanstha Ltd.; Surkhet, Mr. Shyam Prasad Sah – Chairman, Mr. Shiv Prasad Sah and Mr. Kishori Sah- board members and Mr. Satya Deo Raut– CEO representing from the Mithila Laghubitta Bittiya Sanstha Ltd., Dhanusha Mr. Kabiraj Khanal- board members of Rojgar Bachat Tatha Rin Sahakari Sanstha Ltd.,  and the team was led by Mr. Satish Shrestha – Director of CSD.

News

Announcements