Achievements and Problems of People's Credit Funds in Vietnam

This paper looks at the development and current status of the Peoples Credit Funds (PCF) system in Vietnam from the perspective of its rural members. It draws information from background papers and interviews with key informants, officials at the provincial, district and commune levels, and chairpersons and members of local PCFs.The PCF system is designed as a member-owned organization which aims to mobilize savings from its members. The system comprises three managing levels, local credit funds (LCF), regional credit funds, and the central credit fund. Main features of the PCF system are:

• Improved local access for borrowers and savers;
• Risk-sharing across lending units;
• Emphasis on savings mobilization and loan repayment.

The paper states that the PCF system has an important role in stimulating the rural economy in Vietnam and recommends that:

• LCFs should also be recognized as self-help organizations;
• PCF system should offer medium and long term credit and savings services;
• PCFs should also offer group lending services;
• PCFs should act as intermediaries in providing investment options;
• LCFs can represent small farmers who invest in newly-equitized companies.