Circular No. 29/2024/TT-NHNN, which took effect on July 1, 2024, outlines the legal foundation for people’s credit funds (PCFs). However, several provisions are proving restrictive, particularly rules on operational areas and membership.
Restrictions on Operational Areas
The regulation requires that PCFs with inter-commune operations be limited to adjacent communes within the same province or centrally governed city before July 1, 2024. Critics argue the rule is no longer reasonable under new administrative boundaries.
Nhơn Lộc People’s Credit Fund in An Nhơn Tây commune illustrates the issue. Formerly serving Nhơn Lộc and three neighboring communes, its reach has shrunk after local administrative mergers reassigned Nhơn Phúc and Nhơn Thọ communes to other wards now covered by different PCFs.
Chairwoman Đặng Thị Nha said many long-standing members in those areas still hold savings and loans at Nhơn Lộc PCF. But under the new rules, restricting members to only one credit fund, the institution risks losing loyal customers despite their wish to remain.
Membership and market access challenges
The changes not only undermine PCF operations but also limit customer access to capital. Terminating transactions with members who have complied with all regulations remains a challenge, particularly when savings deposits and loan contracts are still active.
Circular 29 also stipulates that only one PCF may operate in each commune or ward. Following administrative mergers, however, some areas now host two or three credit funds. The State Bank of Vietnam (SBV) has yet to issue guidance on whether these funds should continue independently, merge, or dissolve.
Nhơn Thành People’s Credit Fund Director Phan Như Bích Vân noted that in An Nhơn Bắc ward, both Nhơn Thành and Nhơn Hạnh PCFs continue operating while awaiting SBV’s decision, an approach mirrored in other provinces.
Burdensome borrower information rules
Further difficulties arise from SBV’s requirement that PCFs collect data on borrowers’ related parties, including spouses, children, and siblings from both paternal and maternal sides.
This stipulation has stalled loan applications, especially for customers with relatives who live far away or are unwilling to provide personal documents. Businesses and individuals have reported delays, eroded trust, and lost opportunities due to these requirements.
Calls for adjustment
Financial leaders stress that PCFs play a crucial role in supporting local economies and communities, urging regulators to adjust policies in line with practical realities.
Nguyễn Trà Dương, Deputy Director of SBV branch region 11, confirmed the issues have been reported and that feedback from PCFs has been submitted to the central bank for review.