Background

The PCF is a form of co- operative credit organization operating according to the principle of voluntary membership, autonomy and self responsibility for its operating results. Established in 1993, the PCF network in Vietnam consists of 905 grassroot PCFs and a Central People's Credit Fund (CCF) with 24 branches, which operates in 53 of the 64 provinces and cities throughout Vietnam. Approximately 4.8 million individuals are reached by the PCF network.  About 84% of PCFs' assets are funded internally (savings and capital), thus contributing to their autonomy.

PCFs now operate in a stable form and continue to grow.  Despite its achievements, the PCFs are now facing several challenges on its way towards becoming a fully sustainable and autonomous financial network. These include:

- level of capitalisation that doesn't keep pace with the growth in assets;

- the difficulty in harmonising practices and technologies which would allow efficient exchanges of information and transfer of funds among individual PCFs;

- variable profitability and quality of governance across regions, etc.

The management of the PCFs and the Vietnamese authorities have come to the conclusion that in order to ensure the development of the PCF network, an association is required to carry out various roles for the benefit of the whole PCF network.

Project

The GOAL of the project is to strengthen the cohesiveness of the PCF network, to provide a more stable and effective financial system for the poor.

The PURPOSE of this project is to support the development of a PCF Association whose main role will be to advise and assist its member PCFs by providing a service that will enable PCFs to serve their customers.

OUTPUTS. (i) Review of recommendations and action plan for the structure and establishment of a national PCF network association; (ii) Drafting of the Association Charter; (iii) Legal establishment of the PCF Association; (iv) Defined and agreed business plan for adoption by the Association management, which should include the identification of recruitment and training needs; and (v) Awareness raising within PCF network.

ACTIVITIES. It is anticipated that the project will consist of four phases. Phase 1 is familiarization and inception. Phase 2 calls for designing the model for the national PCF network association. Phase 3 will result in a defined and agreed business plan. And Phase 4 covers the legal establishment of the association and development of products and services.

BENEFITS. The Project is expected to (i) contribute to the financial systems diversification in Vietnam; (ii) strengthen the corporate governance of the PCF network; (iii) improve representation, promotion, advocacy, information technology, security, training, etc of the PCFs within the network; (iv) contribute to better accounting practices and auditing standards; and (v) reinforce the competitiveness of the Association