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Experts seek way to improving rural credit
A seminar focusing on access to credit for Vietnam ’s rural areas following the country’s accession to the World Trade Organisation (WTO) was held in Hanoi on Dec. 18.
The seminar, co-hosted by the State Bank of Vietnam (SBV) and the Ford Foundation, aimed to gain an in-depth understanding of the reality of credit access in Vietnam ’s rural areas, and orientate credit development in those areas.
The participants agreed that credit activities should play a key role in attracting sources of capital to ensure agricultural and rural development.
According to the SBV’s Banking Strategy Institute, the SBV has formulated policies to support rural credit schemes, and help enhance the capacity of financial institutions, especially those operate in the agricultural sector. The SBV also called for more foreign capital to be invested in agriculture.
According to the SBV, the network of credit services in rural areas has been expanded remarkably with 2,200 branches of Agribank and 998 people’s credit funds which operate along 10,000 branches and 180,000 other outlets of the Vietnam Bank for Social Policies, not to mention micro- financial programmes in 36 provinces and cities. Total loans in the agriculture sector reached 192 trillion VND by the end of 2007, up 10 times from one decade ago. However, this growth is still lower than the growth rate of loans in other areas of the economy. Consequently, the restructuring of the agricultural and rural economic sector do not yield satisfactory results.
Speeches at the seminar focused on the operations of financial institutions in rural areas, credit facilities for cooperatives, and the operations of bank branches in rural areas.
According to the experts, the presence of financial institutions in rural areas is broad but not deep. The financial institutions are unstable and are lacking in services.
To overcome these obstacles and promote credit investment in rural areas while Vietnamese consolidates its WTO membership, the participants presented a number of solutions at the seminar, such as the formulation of a policy to develop the wholesale system in credit activities, renovating preferential interest rates of loans to rural areas for agricultural purposes, and diversifying rural financial institutions.
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