Pro-Poor Financial System Development
The paper examines the role the legal framework can play in building a pro-poor financial system. There are three types of financial service providers in Vietnam at present: formal, semi-formal, and informal. The products offered by banks do not suit the poor. While semiformal MFIs have adjusted their products to meet the poor clients' demand, their potential remains unlocked because of the lack of clear legal status enabling them to plan for the future.
Possible solutions may include:
- Improve the effectiveness of the Vietnam Bank for Social Policies (VBSP);
- Formalize semi-formal MFIs;
- Enhance cooperation between formal and semi-formal sector;
- Apply best practices in microfinance and accounting principles;
- Establish an association of microfinance practioners.
In the long term, the most important issues remain to improve the effectiveness of VBSP and regulate the country's semiformal MFIs. In the short term, establishing a microfinancial association, introducing microfinance best practices, and fostering partnerships between semiformal MFIs and formal organizations can provide solutions and promote more and high quality financial services for the poor clients.
