VDB needs radical innovation for sustainable development.

The Vietnam Development Bank (VDB) is facing an urgent need to innovate its thinking and strive for sustainable development during the 2023-2027 restructuring period. This was the directive of Deputy Prime Minister Ho Duc Phoc at a meeting with ministries and agencies regarding the VDB's operational situation and the draft Decree regulating the bank's organization and operation.

According to a report by Deputy Minister of Finance Nguyen Duc Chi, as of March 20, 2025, the total capital of Vietnam Development Bank (VDB) reached VND 203,075 billion, a slight increase compared to the end of 2024 but still a significant decrease compared to 2021. Of this, equity capital was VND 16,616 billion, with the remainder being mobilized capital.

Deputy Prime Minister Ho Duc Phuoc assessed that VDB has made many efforts and its operations have shown positive changes.

Regarding outstanding credit, as of mid-March 2025, VDB recorded an outstanding balance of VND 161,540 billion. Notably, investment credit activities reached VND 38,380 billion, demonstrating the bank's strong support for key projects. Since the beginning of the year alone, VDB has signed 31 new investment credit contracts with a total approved loan amount of VND 12,243 billion, disbursing VND 3,137 billion.

One of VDB's highlights is its loan recovery efforts. From the end of 2021 to the present, the bank has recovered VND 33,676 billion in principal and VND 14,946 billion in interest, contributing to reducing the pressure of bad debts. As of now, VDB's bad debts have decreased by VND 22,015 billion, equivalent to 43% compared to 2021.

Despite achieving many positive results, according to Deputy Prime Minister Ho Duc Phoc's assessment, VDB still has much work to do to ensure efficient operation and sustainable development. One of the most important issues is clearly defining the bank's future operating model. According to the VDB restructuring plan for the period 2023-2027, by 2027, the Government will decide whether VDB will continue to operate as a policy bank or transform into a commercial bank.

Furthermore, VDB also needs to address shortcomings in its capital mobilization mechanism, risk management, and financial capacity enhancement. Recovering loans, especially long-standing bad debts, remains a difficult challenge that the bank must thoroughly resolve in the coming period.

At the same time, the Deputy Prime Minister requested VDB to focus on implementing six important contents, including: restructuring the organizational apparatus; new lending activities; loan recovery and handling of bad debts; effective management and use of investment capital for key projects; implementation of conclusions of inspections, audits and examinations; and improving the effectiveness of coordination with ministries, sectors, localities and relevant agencies.

Deputy Prime Minister Ho Duc Phoc held a meeting with ministries and agencies to discuss the operational situation and the draft Decree regulating the organization and operation of the Vietnam Development Bank (VDB).

Furthermore, the Deputy Prime Minister also emphasized that VDB needs to further research new forms of lending, such as entrusted lending under Resolution 57-NQ/TW of the Politburo, as well as utilize ODA funds to expand its operations.

Reforming VDB's operating model is a major concern. If it transitions to a commercial bank model, VDB could increase capital mobilization, expand credit, and operate more efficiently. However, this also poses numerous challenges regarding governance capacity, risk control, and market competitiveness.

Meanwhile, if it continues to operate as a policy bank, VDB needs a clearer legal framework, especially amendments to the Law on Management and Use of State Capital Invested in Production and Business Enterprises (Law 69/2014/QH13) to create conditions for the bank to operate more flexibly and efficiently.

Given the pressures and demands placed upon it, VDB has little time left to hesitate. The bank must quickly implement innovative steps, from corporate governance to credit product development, not only to overcome immediate difficulties but also to move towards a more sustainable operating model in the future.

The Vietnam Development Bank is at a critical juncture, requiring significant innovation in thinking, operating mechanisms, and management methods. This restructuring will not only help the bank operate more efficiently but also contribute to the country's economic development.

In the context of a volatile economy, the role of VDB (Vietnam Development Bank) is becoming increasingly important. Successfully fulfilling its assigned tasks, innovating its thinking, and improving management efficiency will be key to the bank's sustainable development and its continued position as a vital pillar in the national financial system.

Source: https://thoibaonganhang.vn/vdb-can-doi-moi-manh-me-de-phat-trien-ben-vung-161832.html