VDB needs strong innovation for sustainable development

According to the report of Deputy Minister of Finance Nguyen Duc Chi, as of March 20, 2025, VDB's total capital reached VND 203,075 billion, a slight increase compared to the end of 2024 but still a significant decrease compared to 2021. Of which, equity was at VND 16,616 billion, the rest was mobilized capital.

Deputy Prime Minister Ho Duc Phoc assessed that VDB has made many efforts and its activities have changed positively.

Regarding outstanding credit, by mid-March 2025, VDB recorded an outstanding debt of VND 161,540 billion. In particular, investment credit activities reached VND 38,380 billion, showing that the bank has stepped up support for key projects. Since the beginning of the year alone, VDB has signed 31 new investment credit contracts with a total approved loan amount of VND 12,243 billion, disbursed VND 3,137 billion.

One of VDB's bright spots is debt collection. Since the end of 2021, the bank has recovered VND33,676 billion in principal and VND14,946 billion in interest, contributing to reducing bad debt pressure. Up to now, VDB's bad debt has decreased by VND22,015 billion, equivalent to 43% compared to 2021.

Despite many positive results, according to Deputy Prime Minister Ho Duc Phoc, VDB still has much to do to ensure effective operations and sustainable development. One of the most important issues is to clearly define the bank's future operating model. According to the VDB Restructuring Plan for the 2023-2027 period, by 2027, the Government will decide whether VDB will continue to operate as a policy bank or convert to a commercial bank model.

In addition, VDB also needs to overcome limitations in capital mobilization mechanisms, risk management and improve financial capacity. Debt collection, especially long-standing bad debts, is still a difficult problem that banks must thoroughly solve in the coming time.

At the same time, the Deputy Prime Minister requested VDB to focus on implementing 6 important contents including: Restructuring the organizational apparatus; new lending activities; debt collection and bad debt settlement; effectively managing and using investment capital for key projects; implementing the conclusions of inspection, examination and audit; improving the effectiveness of coordination with ministries, branches, localities and relevant agencies.

Deputy Prime Minister Ho Duc Phoc met with ministries and branches on the operation situation and draft Decree regulating the organization and operation of VDB.

In addition, the Deputy Prime Minister also emphasized that VDB needs to study new forms of lending, such as entrusted lending according to Resolution 57-NQ/TW of the Politburo, as well as take advantage of ODA capital sources to expand operations.

The innovation of VDB’s operating model is a matter of great concern. If it switches to a commercial banking model, VDB can increase capital mobilization, expand credit and operate more effectively. However, this also poses many challenges in terms of governance capacity, risk control and market competition.

Meanwhile, if it continues to be a policy bank, VDB needs a clearer legal framework, especially the amendment of the Law on Management and Use of State Capital Invested in Production and Business at Enterprises (Law 69/2014/QH13) to create conditions for the bank to operate more flexibly and effectively.

With the pressure and requirements, VDB does not have much time to hesitate. The bank must quickly implement innovative steps, from corporate governance to credit product development, to not only overcome the current difficulties but also move towards a more sustainable operating model in the future.

The Vietnam Development Bank is at an important turning point, requiring strong innovation in thinking, operating mechanisms and management methods. Restructuring not only helps the bank operate more effectively but also contributes to promoting the country's economic development.

In the context of a volatile economy, the role of VDB becomes even more important. Performing well the assigned tasks, renewing thinking and improving management efficiency will be the key to help this bank develop sustainably, while affirming its position as an important pillar in the national financial system.

Source: https://thoibaonganhang.vn/vdb-can-doi-moi-manh-me-de-phat-trien-ben-vung-161832.html