The miracle of saving 5,000 VND per week

From a minimum mobilization of only 5,000 VND/person, a microfinance organization in Vietnam has raised a capital of 2,300 billion VND, helping hundreds of thousands of women escape poverty - with a bad debt ratio of almost 0.

Save 5,000 VND per week

The National Financial Inclusion Strategy aims for all citizens and businesses, especially vulnerable groups, to have safe and convenient access to and use of appropriate financial products and services at reasonable costs. For the poor and low-income earners, micro-savings is an important pillar.

Sharing practical experiences in practicing financial savings at the seminar "Savings - Endogenous strength in the digital age" organized by Banking Times on the morning of October 30 in Hanoi , Ms. Pham Thi Thuy Linh, General Director of Tinh Thuong Microfinance Organization (TYM) under the Vietnam Women's Union, said: Every week and every month, poor women with low incomes participate in TYM activities at the cultural houses of their residential villages. Here, they contribute very small savings to form accumulated assets for the future.

To raise capital, TYM started with very simple methods such as designing the simplest, most accessible and flexible financial products. Accordingly, women can deposit savings weekly, monthly, with an amount of only 5,000 VND/week. Thanks to that, this organization has reached 220,000 customers.

“For many people, 5,000 VND may not be worth much, but for poor women with low incomes, it is different. Up to now, there are women who still persistently save 5,000 VND per week or even more, 10,000 VND or 20,000 VND. Such simple savings products have helped women accumulate assets from very small capital,” Ms. Pham Thi Thuy Linh shared.

In addition to the mandatory savings associated with customers' loans, there are voluntary savings for women with each book value starting from only 100,000 VND. From the above products, TYM has achieved a savings balance of 2,300 billion VND to date.

“This number is very small compared to the outstanding debt of a transaction office of any commercial bank, but it is the result, the effort, the perseverance of more than 220,000 customers,” Ms. Thuy Linh proudly said.

Up to now, the average savings balance of each TYM customer is 10 million VND/person. Before 2010, that figure was only 1 million VND/person.

Savings capital currently accounts for 70-80% of TYM's total outstanding debt, equivalent to about VND 2,900 billion.

TYM's target customers are 100% poor and low-income women. This feature makes TYM's loans unsecured; repayable weekly or monthly; simple loan and repayment procedures and maintaining credit discipline.

Notably, Ms. Thuy Linh stated a number that all commercial banks and financial companies would like: The repayment rate always exceeds 99.99%, while bad debt is only 0.0004%. Even in the most difficult conditions of the Covid-19 period or natural disasters, customers still save and repay debts on time.

Saving is not just about financial accumulation.

Through approaching hundreds of thousands of women, especially those in rural and mountainous areas, Ms. Thuy Linh commented that these are the ones who initiate and maintain the habit of saving in the family. They plan spending, balance immediate and future needs, spending needs for children's education, and reserve spending in times of difficulty or possible risks.

“Many customers shared that they previously wished to have a savings book of only 2 million VND to prepare for any unexpected events that might happen when they get old. As women in the family, they really adhere to the discipline of saving,” she said.

Ms. Pham Thi Thuy Linh, General Director of TYM. Photo: HG

At the seminar, Deputy Governor of the State Bank of Vietnam Pham Thanh Ha stated that throughout the country's development periods, the spirit of saving has become a common thread in management thinking and policies. Along with the country's development process, savings have become an important support for socio -economic growth.

“In the current context, saving is not simply a financial accumulation but also a way to effectively use resources to invest for the future. Practicing saving helps people develop the habit of safe accumulation and effective investment, while helping businesses take advantage of all resources,” the Deputy Governor assessed.

According to Associate Professor Dr. Chu Khanh Lan, Deputy Director of the Department of Forecasting Statistics - Monetary and Financial Stability (SBV), the Government 's National Financial Inclusion Strategy has identified savings as one of five banking and financial service products. The target by 2025 is to have 25-30% of adults have savings accounts.

From an individual and household perspective, saving helps people balance their daily living expenses, is a way for them to access the formal financial system, and stay away from black credit. To have investment-related skills, each person first needs to have saving skills, thereby improving their ability to withstand risks in life.

Source: https://vietnamnet.vn/dieu-ky-dieu-cua-viec-nhan-gui-tiet-kiem-tu-5-000-dong-2457944.html