Vietnam to enjoy mobile banking services

Over 240 mobile banking cars will be hitting the streets of rural Vietnam to bring banking services to people in the remote parts of the once ravaged Indochinese nation.

The unique finance project brings some $250 million of investment into 90,000 small and medium-sized rural businesses, $36-million worth of microfinance loans to serve 75,000 farm households and 10,000 micro-enterprises, and $5 million for improving the management and operation of participating financial institutions.

The World Bank, along with the Vietnam Bank for Agriculture and the Bank for Development and Investment, brings the mobile banks for distribution to provincial and district bank branches all over the country.

It is all part of the World Bank’s 2nd Rural Finance Project, after the successful 1st rural finance project started in 2000.

Klaus Rohland, director of the World Bank in Vietnam stressed that the country’s basic banking services should reach out to the villages and hamlets.

"A country’s banking system is like its blood system. For the country to function at its peak and to include the poor and the disadvantaged, it must reach out to the farmers and small businesses in remote areas – they are the core of Vietnam’s society," Rohland said.

Mobile banking cars were first introduced on a large scale in Vietnam in 2000 and 2001 when 159 mobile banking cars were provided through the 1st Rural Finance project and assisting 250,000. The World Bank supplied the funds for the project.

Since then, each mobile banking car visits an average of 62 remote locations a month, adding around 2,000 new savings accounts, worth 19 billion Vietnam dong (VND), and nearly 2,000 new loans, worth VND15 billion; and collecting more than VND10 billion in loan payments a month.

The 1st Rural Finance Project through the mobile banking operations helped rural households, including ethnic minority households, to maintain and improve their livelihoods through increasing their access to banking services.

Mobile banking cars have been embraced by the banking sector as a vehicle to fight poverty in the rural areas of Vietnam where 93 percent of the country’ s poor live. In its first year, the project has already pumped more than $63 million to more than 40,000 rural families and businesses all around Vietnam.

"The World Bank sees improvements to Vietnam’s banking sector, particularly banking in the rural area, as critical to the country’s growth and ability to reduce poverty," said Rohland. "We are ready to assist Vietnam in addressing the policies need to make sure that rural financial institutions are viable over the long term and able to gradually reduce their dependence on the state budget."

"The World Bank’s support of the 2nd Rural Finance Project began in mid-2003. The project aims to assist the government in its efforts to develop the rural economy and improve living conditions in the rural areas, through encouraging investment by farm households and private rural entrepreneurs; strengthening the banking system’s capacity to better serve the rural economy; and increasing access of the rural poor to financial services," the World Bank said in a statement.