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NA backs microfinance companies

Update: November, 06/2014 - 09:23
The banking system currently has 47 commercial banks, two policy banks, and 53 foreign banks' branches, besides 28 non-banking credit institutions, one cooperative bank and 1,144 people's credit funds, as well as two microfinance organisations. — Photo cafef.vn

HA NOI (VNS) — The banking services of credit institutions have so far met the economy's diversified demands, but more microfinance organisations and consumer finance companies need to be set up.

This was the suggestion made in a report, released this week by the National Assembly's Economic Committee, on licensing business registration, establishment and operation of enterprises and credit institutions as well as insurance, securities and fund management companies.

According to the committee's report, the banking system currently has 47 commercial banks, two policy banks, and 53 foreign banks' branches, besides 28 non-banking credit institutions, one cooperative bank and 1,144 people's credit funds, as well as two microfinance organisations.

Currently, commercial banks play a key role in the whole credit institution system, the committee said, adding that Vietnamese commercial banks have an advantage over foreign banks in terms of operational network.

However, the relevant authorities should boost the establishment of microfinance organisations and consumer finance companies as their number remains restricted, the report said.

It added that the State Bank of Viet Nam, in the 2011-13 period, issued licences for the establishment and operation of only two microfinance organisations, a foreign bank's branch and 58 people's credit funds.

The committee attributed the modest number of microfinance organisations to a lack of legal framework for licensing the establishment and operation of such organisations.

The report said that the number of newly established enterprises in real estate, construction, mining and industrial processing, besides manufacturing has reduced significantly, in contrast to a consecutive rise of those in education and training, arts and entertainment, and healthcare and social work sectors.

Citing national data on business registration licences, the committee reported that at the end of last year, Viet Nam had roughly 500,000 operational firms among 770,000 firms licensed to be set up.

The provinces and cities in the country's northern mountainous and Central Highlands regions last year saw the maximum increase in the number of newly established firms with 26 per cent and 45.5 per cent respectively, while the number of firms that were dissolved or had ceased operations in the regions fell by 5 per cent and 6.7 per cent respectively.

The number of newly established firms in the Song Hong (Red River) Delta region rose by just 1.9 per cent, while the number of firms that were dissolved or ceased their operations in the region rose by a high 13.3 per cent, the committee said. — VNS

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