Decision No. 149/QD-TTg dated January 22, 2020 on introducing national financial inclusion strategy by 2025 with orientations towards 2030

DECISION

INTRODUCING NATIONAL FINANCIAL INCLUSION STRATEGY BY 2025 WITH ORIENTATIONS TOWARDS 2030

PRIME MINISTER

Pursuant to the Law on Government Organization dated June 19, 2015;

Pursuant to the Law on State Bank of Vietnam dated June 16, 2010;

Pursuant to the Law on Credit Institutions dated June 16, 2010 and Law on Amendments to Law on Credit Institutions dated November 20, 2017;

At the request of Governor of the State Bank of Vietnam in document No. 105/TTr-NHNN dated October 25, 2019,

HEREBY DECIDES:

Article 1.The national financial inclusion strategy by 2025 with orientations towards 2030 (hereinafter referred to as “Strategy”), with the following contents, is approved:

I. VIEWPOINTS

1. Financial inclusion requires the participation of and close cooperation between the public and private sectors where the State is in charge of creating an environment that facilitates market-oriented financial inclusion according to the guidelines and policies of the Communist Party and the State.

2. Financial inclusion must be promoted in connection with safety, efficiency and sustainability of the whole financial system and financial consumer protection.

3. Application of modern technology and innovation are important factors in promotion of financial inclusion.

4. Safety and security must be taken seriously; risks related to provision of financial products and services, especially digital financial products, shall be fully managed and monitored.

5. International breakthrough solutions for promotion of financial inclusion shall be adopted to accelerate achievement of Vietnam’s financial inclusion objectives.

II. DEFINITION, SCOPE, REGULATED ENTITIES AND OBJECTIVES

1. Definition, scope and regulated entities

a) Definition

Financial inclusion means that all people and enterprises have convenient access to affordable financial products and services that meet their needs and are delivered in a responsible and sustainable way, with a focus on poor people, low income earners, vulnerable people, small and medium enterprises and microenterprises.

b) Scope

The strategy aims to popularize basic financial products and services provided by licensed providers, including payments, money transfer, savings, credit and insurance.

c) Regulated entities

This Strategy is applicable to all people and enterprises, with the main targets being those that have no or limited access to financial products and services such as people living in rural, remote and isolated areas; poor people, low income earners, women and other vulnerable groups; small and medium enterprises; microenterprises, cooperatives and household businesses.

2. General objectives

All people and enterprises have safe and convenient access to affordable financial products and services that meet their needs and are provided by licensed providers in a responsible and sustainable way.

3. Specific objectives

a) Diversify financial products and services provided by licensed providers and providers and distribution channels thereof and to enhance access to financial products and services for people with no or limited access to such products and services;

b) Promote digital technology application and innovation in design and distribution of simple, convenient, easy-to-use and affordable financial products and services that suit the needs and payment capacity of all people and enterprises, especially small and medium enterprises, people living in rural, remote and isolated areas, low income earners and vulnerable groups; 

c) Establish legal corridors to promote fair competition, encourage innovation and facilitate diversification of financial products and services and providers and distribution channels thereof; 

d) Complete suitable financial infrastructure to facilitate transactions, ensure safety thereof and ensure information consistency between all market participants;

dd) Develop systems of microfinance projects, programs and organizations that operate in a safe, efficient and sustainable way to provide poor people, low income earners, women and microenterprises with diverse and flexible financial products and services, contributing to implementation of the guidelines for social security assurance and sustainable poverty alleviation of the Communist Party and the State; 

e) Improve financial literacy of people and enterprises, ensure all people and enterprises possess the knowledge, skills, attitude and behaviors necessary for selection and use of financial products and services. Develop mechanisms for financial consumer protection to ensure consumers are provided with adequate information and treated fairly. 

4. Some targets for 2025

Aim to achieve the following targets by the end of 2025:

- At least 80% of adults have transaction accounts with banks or other licensed institutions; and every adult has at least one transaction account with a bank or another licensed institution by 2030;   

- There are at least 20 branches/transaction offices of commercial banks per 100.000 adults;

- At least 50% of communes have a point of provision of financial services (branches and transaction offices of credit institutions and banking agents; excluding points of provision of financial services of Vietnam Bank for Social Policies);

- At least 25% - 30% of adults have savings in credit institutions;

- Number of cashless payments increase by 20% - 25% every year;

- At least 250.000 small and medium enterprises have outstanding debts in credit institutions;

- Ratio of credit outstanding balance for agricultural and rural development to total credit outstanding balance of the economy reaches 25%;

- Ratio of premiums to average GDP reaches 3,5%;

- At least 70% of adults have credit history in the credit information system of the State Bank of Vietnam.

III. MAIN TASKS AND SOLUTIONS

1. Completion of legal frameworks to facilitate achievement of financial inclusion objectives

a) Study and promulgate regulations on banking agents, which shall permit banks to authorize non-bank entities to act as their agents and provide some of their banking products and services for commission;

b) Research and promulgate level-specific regulations on transaction accounts with suitable fee policies to encourage all citizens to open accounts for cashless payments;

c) Review and amend or promulgate legislative documents providing for each level of client identity verification and client identification, which must suit the characteristics and level of risk of each type of product or service and client group; permit application of the electronic Know Your Client procedure (e-KYC) in account opening at licensed institutions to meet the needs for small value payments of individuals and enterprises;

d) Review and amend or promulgate legislative documents providing for electronic money and electronic money accounts being prepaid payment instruments for cashless payment methods such as prepaid cards, digital wallets, etc.;

dd) Review and amend or promulgate legislative documents on provision of financial products and services, especially products and services based on digital technology, to promptly establish stable and adequate legal corridors for financial product and service providers;

e) Review and amend or promulgate legislative documents to facilitate mobilization of society's resources and encourage different types of ownership to participate in microfinance activities; formulate and develop microfinance projects, programs and institutions with safe and efficient operation to promote access to financial services for poor people, low income earners, women and microenterprises;

g) Review and amend or promulgate legislative documents on inspection and monitoring to ensure safe, efficient and lawful promotion of financial inclusion;

h) Study and promulgate a fintech regulatory sandbox for the banking sector;

i) Study and promulgate incentive policies and mechanisms for development of microinsurance products for poor people and low-income earners;

k) Study and promulgate regulations on access to and use of the national residential database, and on permission for financial service providers to use information from the national residential database for the e-KYC procedure;

l) Study and promulgate regulations on use of the e-KYC procedure based on the national residential database.

2. Diversification of providers and distribution channels to provide convenient access to affordable basic financial products and services for people and enterprises

a) Aim to develop banking agent models to expand access to financial services for people living in areas with no or few banking services:

- Study and gradually put banking agents into operation; eligible banks may appoint banking agents in areas where there are few branches and transaction offices of credit institutions;

- Study and enable non-bank institutions having a widespread network or operating in rural, remote and isolated areas (such as people’s credit funds, microfinance institutions, post offices, gas stations, networks of telecommunications organizations, networks of some other non-bank institution, etc.) to become banking agents to quickly expand points of provision of financial services.

b) Develop modern distribution channels based on digital technology to promote access to affordable financial products and services, especially via mobile phones:

- Promote mobile payments and digital banking and digital financial products and services for people living in rural, remote and isolated areas;

- Enable fintech organizations and telecommunications organizations to actively participate in the financial product and service supply chain based on healthy competition and cooperation with credit institutions;

- Encourage credit institutions to cooperate with fintech organizations and payment intermediaries in providing new payment technologies and solutions that are easy to employ, affordable, convenient, safe and suitable for personal payments.

c) Expand points of service provision of credit institutions in rural, remote and isolated areas to provide financial products and services for people living in such areas:

- Encourage credit institutions to develop branches and transaction offices in rural, remote and isolated areas;

- Continue to develop and arrange ATM and POS networks around the country reasonably to ensure that they operate effectively and meet the market's demand; encourage other institutions and banks to invest in and expand ATM and POS networks in rural, remote and isolated areas.

d) Effectively use the public postal network for provision of basic financial services:

Encourage development of basic financial services provided via the public postal network; enable the public postal network to cooperate with financial service providers and fintech organizations in developing affordable digital financial services for people living in rural, remote and isolated areas;

dd) Develop systems of microfinance projects, programs and organizations that operate in a safe, efficient and sustainable way to promote access to financial services for poor people, low-income earners, women and microenterprises:

- Encourage microfinance projects, programs and organizations to diversify products and services for poor people, low income earners, women and microenterprises; encourage development of models of operational connection between commercial banks and microfinance projects, programs and organizations; facilitate cooperation between microfinance projects, programs and organizations and fintech organizations to enhance technology application in provision of basic, convenient and affordable services to people living in rural, remote and isolated areas;

- Assist microfinance projects, programs and organizations with accessing concessional funding sources; increase private contributions to financial resources for provision of microfinance products and services;

- Encourage microfinance projects, programs and organizations to participate in promotion of financial education;

- Enable socio-political organizations, local governments and non-governmental organizations to actively participate in and support promotion of microfinance activities.

e) Enhance capacity of specialized financial institutions whose orientations align with financial inclusion objectives, namely Vietnam Bank for Agriculture and Rural Development, Vietnam Bank for Social Policies, Co-op Bank and People’s Credit Funds, suiting the strategy for development of Vietnam's banking sector by 2025 with orientations towards 2030 approved in the Prime Minister’s Decision No. 986/QD-TTg dated August 08, 2018.

3. Diversification of basic financial products and services for target groups of financial inclusion.

a) Promote cashless payments to provide access to cashless payment services for target groups of financial inclusion:

- Encourage banks to provide checking accounts that have no maintenance fee or minimum balance, have limited features and are connected to ATM cards for the retired, social benefit recipients, the elderly, poor people, students and other suitable vulnerable groups, etc. to deposit or withdraw money, make low value transactions, receive pension/social benefits and pay utility bills;

- Boost cashless state budget expenditures and expenditures originating from state budget for salary, allowance and benefit recipients and goods and service providers;

- Encourage individuals and enterprises to collect/pay tax, fees and charges, incur administrative penalties and pay utility bills and tuition without using cash;

- Boost cashless payment of pension and social insurance benefits via bank systems;

- Encourage credit institutions and other licensed institutions to develop easy-to-use money transfer and payment services that suit the situation in rural, remote and isolated areas;

- Encourage enterprises to pay salaries and pay for goods and services via accounts.

b) Boost development of financial products and services for agricultural production and rural areas:

- Assist credit institutions with improving efficiency of loans provided to assist domestic production and sale of agricultural products via application of high technologies and value chain linkages in agricultural production;

- Develop insurance products for agricultural production;

- Develop consumer credit products with reasonable interest rates that are suitable for consumer credit borrowers to help prevent usury;

- Support enhancement of credit institutions’ capacity for risk management, product design and business development to boost the financial resources and manpower necessary for restructuring of the agricultural sector, with a focus on diversification of income of agricultural producers.

c) Promote development of financial products and services for small and medium enterprises, cooperatives and household businesses:

- Continue to study and complete the existing credit guarantee mechanism to improve efficiency of credit guarantee;

- Improve unsecured loans and use of goods, property on land, movable property and cash flow as collateral;

- Encourage credit institutions to expand provision of unsecured loans with loan management methods that suit characteristics of business operations of small and medium enterprises, cooperatives and household businesses;

- Encourage non-bank credit institutions, people’s credit funds, microfinance institutions and insurance enterprises to provide products and services that meet different needs of small and medium enterprises, cooperatives and household businesses;

- Improve efficiency of off-budget state funds used for loans and credit guarantee.

4. Completion of financial infrastructure and enhancement of efficient use thereof to facilitate transaction fee reduction and meet requirements of financial inclusion promotion

a) Complete payment infrastructure:

- Facilitate development and completion of the automated clearing house (ACH) system to support individual payments and corporate payments 24/7;

- Study and develop mechanisms for electronic switching and clearing services, which shall permit lawfully eligible institutions and enterprises to provide these services to increase competition, ensure safety and security, enhance efficiency, and reduce transaction fees for people and enterprises;

- Study and promulgate technical regulations to further connect credit institutions with each other and with fintech organizations and other service providers to support electronic transactions.

- Strengthen electronic banking safety and security to build public trust and protect financial consumers.

b) Develop the national residential database:

- Provide policies for connection and sharing of the national residential database with other specialized databases;

- Provide policies for assignment of citizen identification numbers to all individual accounts to support management and verification of clients and beneficiaries upon provision of goods and services;

- Enhance information connection and sharing between authorities and institutions to facilitate administrative reform and e-Government development.

c) Develop the national financial inclusion database based on statistical indicators for level of access to financial services and extent of use and quality thereof; incorporate basic financial inclusion objectives into the household living standards survey program; and conduct sociological investigations into people’s access to financial services.

d) Develop a high quality, adequate and consistent national credit information database based on modern technology; fully incorporate information from credit institutions in the banking sector, and gradually expand to information from institutions outside of the banking sector; and promptly provide diverse products and services suitable for each type of credit institution.

5. Financial education, enhancement of financial literacy and capacity; and financial consumer protection

a) Formulate and adopt overall solutions for enhancement of financial management knowledge and skills and understanding of financial products and services of people and enterprises, leading to increased use of financial products and services provided by licensed institutions and better assessment of benefits and risks thereof, which shall enable people and enterprises to choose the products and services that suit their needs:

- Incorporate financial education into the national educational program;

- Formulate and launch programs providing information on benefits, costs, risks, management methods and efficient use of financial products and services for people; concurrently, publish procedures for settlement of complaints and disputes for all service users;

- Promote financial literacy programs for people and enterprises;

- Improve financial skills, especially finance lease, insurance, risk management tools etc. for agricultural producers;

- Enhance accounting and financial management capacity of cooperatives;

- Heighten the roles of socio-political organizations in encouraging their members to improve their financial knowledge.

b) Establish legal frameworks for financial consumer protection:

- Study and promulgate regulations on financial consumer protection, which shall provide for the mechanisms for protecting financial consumers against unfair treatment from financial service providers; information transparency requirements for financial service providers; and transparent approach to and efficient settlement of disputes by financial service providers for financial consumers;

- Inform fee structure and service fee types to financial consumers;

- Promote the roles of credit institutions in responsible lending, with a focus on enhancement of borrower’s financial knowledge, especially the rights to credit information access and protection and mechanisms for dispute settlement and information correction.

c) Develop Deposit Insurance of Vietnam based on the strategy for development of Vietnam's banking sector by 2025 with orientations towards 2030 approved in the Prime Minister’s Decision No. 986/QD-TTg dated August 08, 2018.

6. Other assistance solutions:

a) Incorporate financial inclusion objectives into new rural development programs;

b) Formulate and launch training programs concerning promotion of financial inclusion in Vietnam for workforce of supervisory authorities and financial service providers; 

c) Enhance cooperation in promotion of financial inclusion in Vietnam with other countries and international development organizations;

d) Further inform the roles and meanings of financial inclusion to state agencies, local governments, socio-political organizations, financial service providers, people and enterprises. 

dd) Boost restructuring of credit institutions based on schemes and plans approved by competent authorities.

Article 2. Implementation

1. A national steering committee for implementation of this Strategy shall be established. The State Bank of Vietnam shall take charge and cooperate with relevant authorities in formulating and proposing the functions, duties and regulation of operations of this national steering committee to the Prime Minister for decision. The apparatus of the national steering committee shall be based in the State Bank of Vietnam and organized by the Governor of the State Bank of Vietnam.

2. Assignment of a number of main tasks:

a) Based on their respective functions and duties, ministries, local governments and relevant authorities shall proactively cooperate with the State Bank of Vietnam in the following tasks:

- Complete and submit their action plans to the State Bank of Vietnam for consolidation within 6 months starting from the date on which this Strategy is approved;

- Perform the tasks assigned in the Action Program and described in action plans. Submit annual reports on performance of such tasks to the State Bank of Vietnam for consolidation.

b) The State Bank of Vietnam shall take charge and cooperate with ministries, local governments and relevant authorities in the following tasks:

- Implement this Strategy; provide guidelines for, expedite and assess such implementation, prepare reports on difficulties arising from such implementation and carry out assessment of results of such implementation on an annual basis;

- In 2025, conduct preliminary assessment of implementation of this Strategy, and propose objectives and targets as well as revising tasks and solutions (if necessary) of the following period;

- In 2030, summarize and assess implementation of this Strategy.

c) Ministry of Planning and Investment shall:

- Cooperate with the State Bank of Vietnam and relevant authorities in incorporating financial inclusion objectives into the formulation and implementation of 5-year and annual socio-economic development plans;

- Direct General Statistics Office of Vietnam to closely cooperate with the State Bank of Vietnam in formulating and selecting suitable financial inclusion objectives to incorporate into the household living standards survey program;

- Cooperate with the State Bank of Vietnam in collecting and providing data on credit and financial service access via investigations into demand and supply from enterprises and individuals;

- Take charge in consolidating and allocating annual capital for investment in development according to regulations of the Law on Public Investment, Law on State Budget and relevant guiding documents for implementation of this Strategy.

d) Ministry of Finance shall take charge in consolidating and allocating annual capital for recurrent expenditure according to regulations of the Law on State Budget and relevant guiding documents to implement this Strategy.

dd) Ministry of Information and Communications, Ministry of Education and Training, Vietnam Television and Voice of Vietnam shall raise the society’s awareness of financial inclusion and the progress towards achieving Vietnam’s financial inclusion objectives.

e) Ministry of Foreign Affairs shall:

- Cooperate with relevant ministries in monitoring global and regional development of financial inclusion; study models, policies and experience concerning financial inclusion promotion of other countries;

- Cooperate with the State Bank of Vietnam in participating in international financial inclusion forums and programs more frequently;

- Cooperate in promotion of cooperation in financial inclusion in partnerships and multilateral forums.

Article 3.This Decision takes effect from the date on which it is signed.

Article 4.Governor of the State Bank of Vietnam,Ministers, heads of ministerial-level agencies, heads of Governmental agencies, Chairpersons of People’s Committees of provinces and central-affiliated cities and Chairpersons of Boards of Directors, general directors and directors of financial service providers shall implement this Decision./.

APPENDIX

ACTION PROGRAM ON NATIONAL FINANCIAL INCLUSION STRATEGY

(Enclosed with the Prime Minister’s Decision No. 149/QD-TTg dated January 22, 2020)