Dak Lak takes policy credit to the grassroots as lending surges

Dak Lak takes policy credit to the grassroots as lending surges

The Central Highlands province of Dak Lak is expanding policy lending while bringing credit closer to underserved households, with the focus increasingly shifting from disbursement growth to loan quality and sustainable access.

After seven months, nearly $157 million in policy credit had been disbursed across the province. Alongside expanding its funding resources, the Vietnam Bank for Social Policies has also been bringing its transaction network closer to local communities.

In areas where a loan of just several thousands US dollars can determine whether a household has additional capital to feed production, purchase livestock or maintain its livelihood, getting funds to the right place is no less important than increasing the amount of funding.

Across Dak Lak province, policy-based lending by VBSP system is being strengthened along these lines. As of July 31, total policy credit resources in the province stood at nearly $641 million, up 10.4 per cent from the end of 2025. Outstanding loans reached $639 million, an increase of 10.35 per cent, with nearly 249,000 customers still carrying outstanding balances.

Photo: VBSP

In the first seven months alone, lending turnover reached nearly $157 million, providing loans to 56,035 poor households, near-poor households and other policy beneficiaries.

Funds entrusted by the local budget to VBSP reached $65.1 million by the end of July, an increase of more than $18.2 million from 2025 and accounting for 10.2 per cent of total capital resources.

Earlier, Dak Lak People's Committee approved the project “Policy Credit Investment for Poor People and Other Policy Beneficiaries in Dak Lak Province for the 2026-2030 Period,” under which $98.4 million is to be allocated from the local budget.

With nearly $639 million in outstanding loans, policy credit is now reaching numerous customers across the province, including groups that have difficulty accessing commercial credit.

Under the policy credit model, the distance between the bank and borrowers also determines their ability to access capital. Dak Lak currently maintains 287 commune-level transaction points, located within local communities to serve residents at the grassroots.

Borrower Vi Van Duc in Ea Khal Commune, Dak Lak Province, took out a $4,000 loan from VBSP system to invest in 1,000 coffee trees, which have produced two harvests. Photo: VBSP

Credit quality at the commune level has been rated good across all 102 of the province's 102 communes. At the same time, all 102 commune-level representative boards of VBSP Board of Management have been established and are operational.

The representative boards have held their first meetings, assigned responsibilities and developed inspection and supervision programmes.

Under this network are 6,060 savings and credit groups, together with a system of socio-political organisations that receive entrusted funds to carry out policy credit programmes.

By the end of July, outstanding loans jointly managed by these organisations stood at $634 million, equivalent to around 99.3 per cent of total outstanding loans.

Under this structure, VBSP does not stand alone in bringing capital to the grassroots. Local authorities, socio-political organisations and savings and credit groups all participate in the appraisal, management and supervision of loans.

With outstanding loans rising by more than 10 per cent over the past seven months, the question of how to control loan quality is also drawing attention, particularly as most policy credit customers have limited financial resilience.

In Dak Lak province, total overdue and frozen loans stood at $1.11 million as of July 31, accounting for 0.17 per cent of total outstanding loans and down by $23,000 from the end of 2025.

Overdue loans alone stood at just $420,000, equivalent to 0.07 per cent. At the level of individual borrowing groups, 5,686 of the 6,060 Savings and Credit Groups had no overdue loans, equivalent to 93.8 per cent. A total of 35 out of the 102 communes had no overdue loans.

This is the inspiring result of a credit management model that relies strongly on the grassroots network.

Socio-political organisations not only help channel capital to borrowers, but also participate in monitoring the use of funds, urging borrowers to repay principal and interest, and inspecting the operations of Savings and Credit Groups.

The Dak Lak Branch of VBSP has set a target of completing all of its credit plan by September 30, while continuing to review borrowing needs and accelerate disbursements under programmes eligible for deployment, funded by both central and local sources.

This requires, on the one hand, identifying people with genuine capital needs so that funds do not remain idle. On the other, it requires controls from the initial application stage through the use of funds to limit the emergence of bad debt later on.

The branch has identified continued lending inspections as a priority, ensuring that funds reach the right beneficiaries and are used for the right purposes.

For problematic loans, relevant units will analyse the causes, classify the loans and seek appropriate solutions, particularly in cases where borrowers can no longer repay.

Policy credit, therefore, is not simply a matter of how many dollars are disbursed.

Behind the nearly $641 million in outstanding loans are hundreds of thousands of customers, thousands of borrowing groups and an extensive network working to ensure that funds reach the right people and the right places.

For the remainder of the year, the challenge is therefore not simply to complete the disbursement target. With nearly $641 million in outstanding loans, the larger task is to ensure that capital continues to reach the right people, for the right purposes, while maintaining credit quality at the grassroots level.

VIR