HOW CONSUMER PROTECTION CONDUCTED BY VBSP IN VIETNAM?
Over the last years, the micro finance sector worldwide is arguing about the high lending interest rate or overdue debt of the clients, from Bolivia to Bangladesh, India and South Africa. The successful practices of microfinance so far has revealed growing evidence that the poor completely can afford to repay the debt, which has accelerated the commercialization of micro finance sector faster than expected but omitting consumer protection practices. Accordingly the poor borrowers who have limited access to information and even are illiterate are easily cheated in lending procedures and process.
For the issue, microfinance institutions are going through innovations to strictly and comprehensively follow the code of operations suggested by CGAP to ensure consumer protection. Being recognized as the leading micro finance player in Vietnam, almost providing micro loans to the poor and other policy beneficiaries, Vietnam Bank for Social Policies (VBSP) does its best to ensure the most favorable environment for the clients and the international consumer protection practices.
Ensure qualified services and cost-effective delivery
All prevailing credit programs of VBSP have preferential interest rate, which is lower than commercial one to lighten the financial burden for the poor and other policy beneficiaries. Additionally the lending procedures, collection of interest and principal, savings etc,. are performed on convenient and non-fee basis. Almost 90% of VBSP transactions occurred at mobile transaction points at communes to minimize transaction time and costs for the clients. The scheduled transaction date is fixed in a month at one commune. The date, time, venue of monthly transaction are publicized for implementation and supervision of the people .
VBSP staff present high respect and good behavior to the clients. VBSP has promulgated the code of conduct to strictly prevents improper attitudes.
Transparent and adequate information
The clients who have demand to borrow money from VBSP will fulfill the loan application form provided by VBSP and hand over to the leader of Savings and Credit Groups. The group leader then holds the group meeting for public selection of eligible borrowers among group members, submits the list of selected applicants to the Poverty Alleviation Board and the Commune People’s Committee for certification.
After the receipt of the certified credit dossier, VBSP considers to make final decision and informs the applicants, publicizes the approved list and disbursement schedule after five working days at the latest at the commune mobile transaction point. This closed lending cycle ensures the transparency and adequacy of information to the clients.
At mobile transaction points, all policy preferential credit of the Government, the lending and saving interest rate and lending procedures are all publicized to ensure transparent, public and adequate information at all level. On a fixed day of the month, the clients have direct transaction with VBSP in savings, borrowing and debt payment with the witness of staff of mass organizations, the head of Savings and Credit Groups and relevant commune authorities.
Prevent the clients to fall into debt overload situation
The micro finance institutions usually offer the loan size suitable to the payment capacity of the clients to prevent them from over-indebtedness. VBSP determines the loan size based upon the demand and payment capacity of the poor and other policy beneficiaries. The debt payment term is flexible and fitting the income flow from production and business of the client.
Transparent and appreciate collection of principal and interest
VBSP has collaborated with the Savings and Credit Groups to collect interest monthly to save the travel time for the clients. The group leader collects savings from its members and issues the receipt (printed and provided by VBSP), and then deposits total collected amount to VBSP at commune transaction point. In addition to direct and regular checking lending situation with borrowers, VBSP is now working out more solutions to strengthen loan management, sending message on lending procedures through mobile phone in the way to ensure consumer protection.
To avoid the risk, VBSP have regulation to collect principal directly from the borrowers at the commune transaction points or VBSP transaction office in the area. The group leader is entrusted to collect only interest and savings from its members.
In case the borrowers suffer from objective risks and become unable to repay the debt, VBSP applies adequate treatment such as rescheduling, freezing and recycling the loan to facilitate the clients to maintain production and business for debt payment.
Consumer complaint and dispute resolution mechanism
VBSP have an official channel for the clients to send comments on services quality and receive response from VBSP. 100% of VBSP offices at all level and the mobile transaction point at commune have the hotline number and comment box available. VBSP also have Q&A session on the website (http://vbsp.org.vn).
VBSP’s Management Board has focused on complaint and dispute resolution in the whole system to ensure its operation in line with Vietnam’s regulations and laws on complaint and dispute resolution. Accordingly VBSP has decentralized its branches in the whole system to resolve complaints and dispute under the regulations at local level and functioned a unit at the Headquarters to receive and resolve complaints from clients.
Integrate other supporting activities
Besides lending support, VBSP also actively gives the clients technical assistance in financial literacy, training to group leaders on group management and recording skills, communication on policy, new lending programs at mobile transaction points and collaborates with relevant agencies for agriculture, forestry and fishery promotion in the area.
The transparent and publicized information from VBSP give people better understanding about policy credit for sustainable poverty alleviation and encourage them and concerning parties actively participate in the supervision of policy credit implementation by VBSP. Furthermore the attention and support of the mass organizations and local authorities affirm the effective and efficient socialization in poverty alleviation in Vietnam.