Vietnam Microfinance Country Profile

This paper presents the microfinance profile of Vietnam. It describes the:

• Need for microfinance services since 40% of the households do not have access to formal financial services;
• Development of microfinance sector marked by government interventions through the state-owned banks and programs;
• Growing presence of formal and semi-formal sector in the provision of financial services to rural poor;
• Delivery models for credit with adapted group lending and Grameen Bank methodology, and deposit mobilization with compulsory savings as popular trends;
• Efforts to enact a decree on regulation and supervision with the support of Asian Development Bank.

The paper also discusses the challenges that the sector faces:

• Lack of comprehensive regulatory framework;
• Government intervention and, thus, unsustainable banking practices like subsidized interest rates;
• Credit-focus with regulatory constraints for deposit mobilization;
• Lack of funds;
• Lack of institutional capacities.

Finally, the paper concludes with the efforts of the various organizations to support the microfinance sector.