Rates, risk keys to micro-finance

Rates, risk keys to micro-finance

Sustainable interest rates and risk management were the hot topics during a seminar on the country's micro-finance institutions held yesterday in Ha Noi.

The event was organised by the International Finance Corporation (IFC) in collaboration with Switzerland's Ministry of the Economy, Tinh Thuong One Member Liability Limited Micro-finance Institution (TYM) and the Viet Nam Micro-finance Working Group (MFWG).

International and domestic experts said the seminar had offered an insight into the issues surrounding the application of interest rates in micro-finance institutions.

Through practice and experience, the IFC's working group concluded that the interest rates of micro-finance institutions were not really higher than other credit institutions and did not adversely affect their customers.

They said that the specific characteristics and activities of micro-finance institutions should be considered in order to assess and develop appropriate interest rate policies.

Risk management procedures were also discussed by the experts. Andrew Pospielovsky, an IFC's consultant, said that managing risks to any financial institution required risk identification, assessment, measurement, reduction, monitoring and evaluation.

Andrew Pospielovsky said the building of risk management culture was something micro-finance institutions had been urgently doing, particularly in the period of transition and growth.

The seminar reflected that micro-finance has been officially recognised in Viet Nam and is now part of the national financial system and has contributed towards the country's economic development. The sector is growing sustainably in accordance with standards and social responsibility.

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