Thai Binh province's people's credit fund system: 30 years of construction, innovation, development and efficiency

On July 27, 1993, the Prime Minister issued Decision No. 390/TTg to implement the pilot project to establish a People's Credit Fund (PCF). This is one of the first steps to concretize the leadership and direction of the Party and the State in forming the PCF system of the whole country in general and the PCF system of Thai Binh province in particular. After 30 years of construction and development, up to now, the PCF system of Thai Binh province has continuously developed in terms of quantity, scale and quality, affirming its positive role in contributing to growth, economic restructuring, implementing the goal of hunger eradication and poverty reduction and the new rural construction program in the locality.

Comrade Dao Minh Tu, Deputy Governor of the State Bank of Vietnam visited and worked at Thanh Ne People's Credit Fund (Kien Xuong).

Grow Strong

On the basis of being selected by the central government as one of 14 provinces and cities nationwide to pilot the project of establishing People's Credit Funds, Thai Binh has established a Steering Committee for piloting the establishment of People's Credit Funds in the province, and at the same time issued many documents directing local Party committees and authorities in the province to seriously deploy and implement. The State Bank of Vietnam (SBV) Provincial Branch, as a founding member of People's Credit Funds, has proactively guided the content of activities, ensured the legal and administrative procedures for establishing People's Credit Funds, organized staff training, inspected and controlled, and ensured operations in accordance with regulations and charters. The first phase of the pilot was conducted in 4 districts: Thai Thuy, Hung Ha, Tien Hai and Vu Thu with 12 communes establishing new People's Credit Funds and 5 communes having credit cooperatives licensed to operate under the Ordinance on Banks, Credit Cooperatives and Finance Companies since 1992. To prepare for the People's Credit Funds to open, the State Bank of Vietnam Provincial Branch prepared a team of lecturers, compiled documents, organized training for 52 officials of 19 pilot communes; deployed the guidance documents of the State Bank of Vietnam on the organization and operation of People's Credit Funds; at the same time, assigned 1 specialized official in each district to advise the district on the establishment of People's Credit Funds, responsible for assisting, inspecting and grasping the situation of People's Credit Funds.

With active participation, by December 31, 1994, the whole province had 16 People's Credit Funds established with 3,859 members, charter capital of 435 million VND, mobilized capital of 1,785 million VND and outstanding loans of 3,039 million VND. From the initial effectiveness of the pilot implementation, by March 1995, the Standing Committee of the Provincial Party Committee agreed to expand the establishment of People's Credit Funds in all districts and towns to better serve the demand for loans to develop production and business, promoting the process of restructuring the agricultural and rural economy towards industrialization and modernization.

By the end of December 1996, the whole province had 75 People's Credit Funds with 33,422 members; total operating capital reached 54.2 billion VND, of which mobilized capital reached 27.6 billion VND; the funds had 54,613 members borrowing capital. The formation, development and growth of the Thai Binh People's Credit Fund system during the pilot years created a type of cooperative credit organization operating in accordance with practical conditions in agriculture and rural areas; a new financial institution replacing the previous credit cooperative model.

Achievements of the People's Credit Fund system of Thai Binh province

1 certificate of merit from the Prime Minister;
19 certificates of merit from the Governor of the State Bank of Vietnam;
34 certificates of merit from the Vietnam Cooperative Alliance;
85 certificates of merit from the Chairman of the Provincial People's Committee;
1 QTDND was awarded the Third Class Labor Medal;
2 emulation flags of the State Bank of Vietnam;
6 QTDND received the Golden Rice Award...

Constantly strengthening, improving and developing

After its establishment, the People's Credit Fund system in the province has been continuously consolidated, improved and developed. In particular, since the implementation of Directive No. 57-CT/TW dated October 10, 2000 of the Politburo, the project to restructure the People's Credit Fund system in the province for the period 2011 - 2015, the project to restructure the People's Credit Fund system in the province for the period 2016 - 2020 and the period 2021 up to now, the People's Credit Funds in the province have increased their charter capital in accordance with the charter capital approved by the State Bank of Vietnam's provincial branches, without the situation of domination of charter capital and operations by a few members; proactively strengthening management and supervision of operations, especially the operations of transaction offices, ensuring quality, efficiency, and suitability with the actual operations of each People's Credit Fund; Restructuring business operations, having a strategic business orientation, improving competitiveness, enhancing the application of information technology and modernizing banking technology; basically completing the correction of existing problems and violations in operations, ensuring safety ratios in operations, low bad debt (0.5% of total outstanding debt); constantly striving to develop members, focusing on mobilizing idle capital from members and residents, thereby providing capital in a timely manner, creating conditions for members to develop production, limiting the situation of usury and "black credit" in the locality.

By June 30, 2023, the whole province had 85 People's Credit Funds operating in 146 communes, wards and towns, an increase of 69 People's Credit Funds; total number of members was 156,467 (average 1,840 members/People's Credit Fund), an increase of 40.6 times; total capital reached 13,545 billion VND (average 159 billion VND/People's Credit Fund), an increase of 4,203 times, of which savings deposits reached 12,412 billion VND (average 146 billion VND/People's Credit Fund), an increase of 6,954 times; total outstanding loans reached 9,928 billion VND (average 117 billion VND/People's Credit Fund), an increase of 3,267 times; the difference between income and expenses reached 77.7 billion VND, an increase of 655 times compared to 1994.

Trading activities at Tan Phong People's Credit Fund (Vu Thu).

Along with professional work, the People's Credit Fund system is always aware of its responsibility to the community and is active in social security work. From 2016 to 2022, the People's Credit Fund system in the province has donated 2.6 billion VND to funds for the poor, supported victims of Agent Orange, visited families with meritorious services, etc. and joined hands to support the purchase of equipment to prevent and fight the Covid-19 pandemic with an amount of 2.1 billion VND. With the efforts of the People's Credit Funds, the activities of the People's Credit Fund system in the area have basically completed the work of consolidating, rectifying and creating important foundations for the completion and development stage in the following years.

The success of the People's Credit Fund system over the past 30 years must be attributed to the extremely important role of the People's Credit Fund in Thai Binh province, now the Vietnam Cooperative Bank, Provincial Branch - as a bridge to regulate capital between People's Credit Funds, transfer capital from the central People's Credit Fund to People's Credit Funds for lending to members, ensuring smooth flow, and solving liquidity difficulties in the entire system. In addition, the Vietnam Cooperative Bank, Provincial Branch also deploys many banking products and services, cares for and consults member People's Credit Funds, especially the task of linking the People's Credit Fund system, thereby contributing to maintaining stability in the operation of the People's Credit Fund system in Thai Binh province.

Up to now, the Vietnam Cooperative Bank Provincial Branch has admitted 63 People's Credit Funds to the electronic banking system (CF-eBank). To contribute to supporting financial difficulties, supporting liquidity, and strengthening the connection of the People's Credit Fund system, the province has also established and put into operation the People's Credit Fund System Safety Fund, and the Representative Office of the Vietnam People's Credit Fund Association in Thai Binh.

Development orientation

Promoting the tradition and achievements of 30 years of history of construction and development; with the achievements and lessons learned, in the coming time, the People's Credit Fund system of Thai Binh province will continue to seriously implement the resolutions, directives and projects of the Central Party Committee, the Provincial Party Committee Standing Committee and the State Bank of Vietnam on collective economic development; strengthen consolidation and development in accordance with the goals and principles of the type of credit institution as a cooperative according to the provisions of law and international practices; operate safely, effectively, stably and sustainably, meet the capital needs, improve the financial access of People's Credit Fund members, aiming at the main goal of mutual support and assistance among members to serve production, business and improve life; Improve financial capacity, improve the financial situation of the People's Credit Funds, strive to have no weakly operating People's Credit Funds by 2030, with charter capital of over 2 billion VND, bad debt of less than 3%, the proportion of member deposits reaching at least 65% of the total mobilized capital of the People's Credit Funds, 85/85 People's Credit Funds operating profitably; management and professional activities of the People's Credit Funds are gradually digitized according to the roadmap of the State Bank of Vietnam and the People's Committee of Thai Binh province on digital transformation. The People's Credit Fund system is increasingly consolidated and enhanced, ensuring safe operations, actively supporting the development of agriculture and rural areas, limiting usury, ensuring social security, eliminating hunger, reducing poverty, and promoting the development of the collective economy in the locality.

Phan Thi Tuyet Trinh
(Director of State Bank of Vietnam, Thai Binh Province Branch)

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