Completing the credit rating system of Bank for Agriculture and Rural Development of Vietnam - 6

to adjust based on the level of investment in fixed assets in production and business activities of that industry according to economic groups.

Adjust the set of non-financial indicators

Currently, Agribank 's set of non-financial indicators is quite complete, including 46 indicators and divided into 5 groups. In addition to some non-financial indicators that are automatically linked by the system, most of the non-financial indicators are implemented by the staff in charge of grading, which easily leads to errors and conflicts between non-financial and non-financial indicators. Financial indicators. The reason may be due to the wrong selection of staff, but most of it is due to the subjective will of the scorer for a number of reasons. Therefore, in order to minimize the above errors. The author recommends:

- Quantification of non-financial indicators.

- Increase the degree of automation of non-financial scoring: Reduce manual scoring by automating the scoring of non-financial indicators by using technology to create a link between the Loan module and the Social Sciences module.

As follows :

+ Group of ability to repay: Target 205 (Debt repayment sources of customers according to the assessment of CBTD): Quantified by income criteria.

+ Group on management qualifications and internal environment: Indicator 225 (Executive capacity of the person directly managing the business according to the assessment of the CBTD) quantified by the profit target.

+ Group relationship with the bank: Targets 255, 257, 260, 265,266, 270. Set the system to automatically score from the monitoring results on the Loan screen.

+ Group of other operational characteristics: Target 380 (accessibility to capital sources to finance business activities of enterprises). Quantification is based on enterprise size, enterprise profit and target 265.

3.2.3. Building Agribank's own database

Customer rating requires the use of a lot of information at many times, without a database to store customer information, evaluation will be difficult. Therefore, Agribank needs to have a system of summarizing customer information for branches to refer to when conducting scoring, helping to achieve high accuracy in the assessment. Currently, Agribank has a Department of Statistics and Economic Forecasting, but its activities are still very limited. Getting statistical information is really difficult because the information has not been classified clearly, and the forecasts are mainly taken from other sources without specific forecasts and specific analysis for business activities. business of Agribank.


Therefore, if Agribank builds a fairly complete information database based on its own large and diverse customer base combined with other specialized and mass information sources, the appraisal, Customer evaluation will have many advantages, greatly reducing costs in implementing customer policies, managing quality to each loan, and enhancing credit quality.

The credit society system according to international standards requires the synchronization of information technology infrastructure and databases. Agribank always has a policy of prioritizing investment, developing the best information technology system in the banking system and will continue to develop further, creating a premise to promote the provision of the best services to customers.



3.2.4. Separation of duties between the grading department and the crediting department

Currently, customer scoring is assigned to credit officers, this

may affect credit quality because it is difficult to be completely objective in the assessments. Therefore, in order to improve the quality of customer scoring, it is necessary to perfect the organizational model on the principle of separating the scoring department and the credit decision-making department to manage risks and avoid conflicts of interest. Besides, it is necessary to build

a department/department specializing in controlling and re-evaluating the scoring results of branches so that the scoring results most honestly reflect the risks that may occur when the bank decides to grant credit, prevent errors errors due to unintentionally or intentionally falsifying the scoring results from the actual situation of the customer.

3.2.5. Improve staff qualifications and control credit rating results

In all activities, the human factor is a decisive factor for success or failure. People not only have good professional capacity but also have moral qualities. Especially for the bank's internal credit rating, credit quality is greatly influenced by the capacity and experience of the scorer. Scorers need to have a wide and quite in-depth knowledge in the areas of activity of the scoring object as well as experience in scoring to detect inconsistencies in the data provided by the customer ( if any) as well as making the right choice according to the actual situation, accurately assessing the customer's performance and potential risks.

3.2.6. Building Vietnam's industry indexes

In Vietnam, there is a national economic system (VSIC 2007) and is being officially applied. VSIC 2007 system includes 21 level 1 industries, 88 level 2 industries, 242 level 3 industries, 437 level 4 industries and 642 level 5 industries.

Although there have been VSIC sub-sector systems for a long time, currently in Vietnam there is no official state agency implementing and announcing the sector coefficient. Some sectors have developed and announced sectoral targets, but they are still very limited. In the financial market, this activity securities is only done at a few securities companies and investment funds. Due to the application of non-uniform standards based on

on ICB, GICS or NAICS, 10  so the business arrangement of the above companies is not the same, leading to the production of industry indexes is also very different.

Practice shows that the construction of an industry index is an objective need, serving many objects and with many different uses. In the immediate future, it is to serve the industry, stock market, finance and banking and furthermore to create a premise for the development of derivative products. Therefore, it is necessary to have an industry index in Vietnam.

The development of sectoral indexes requires synchronous and unified coordination among sectors, ministries and state agencies and assigns a focal point to perform the calculation of sets of sectoral indexes and uses them for the whole economy. economy . To avoid the situation, each agency and unit will perform and produce different results, which will be both costly, inaccurate and ineffective.

The Government assigns the General Statistics Office to act as the focal point for collecting data and analyzing sets of sectoral indicators. Currently, the General Statistics Office only collects, systemizes, updates, stores and manages the published statistical data. The analysis has many limitations. To perform the in-depth analysis function, it is necessary to invest and upgrade both facilities, technology and people to meet the requirements.

For internal credit rating activities, the industry index is one of the important factors affecting the calculation of customer ratings. When calculating a business's metrics, these metrics need to be compared across periods within the same company to see if the company is growing or declining, compared with companies in the same industry. , with an overall industry index to see how well the company is performing compared to the industry average.

10  ICB (Industry Classification Benchmark) built by FTSE Group and DowJone; GICS (Global Industry Classification Standard) developed by Morgan Stanley and Standard & Poor's; NAICS (North American Industry Classification System) built by the US;

3.2.7. There is a regulatory and binding mechanism on the provision and transparency of business information, and the sharing of information between agencies and sectors.

Information is an important factor determining the success of trading activities in the market. However, the reality of information on the Vietnamese market is still inadequate, unclear, and has low reliability, leading to information asymmetry occurring and reducing the efficiency of transactions in the market. In particular, information asymmetry occurs at a high level for banks' credit activities, generating transaction costs, increasing risks, and inhibiting the development of bank credit activities. Therefore, in order to limit  information asymmetry in the market, it is necessary to take measures

method for information transparency by signaling, screening, sharing and monitoring mechanisms with specific legal provisions on responsibility in information disclosure.

Government agencies such as tax, customs, economic court, etc. need to cooperate and share information with banks to compare and evaluate the operation information of enterprises/business households/individuals… to have most accurate source of information. The sharing of information will help the parties to accurately assess the operation situation of customers. The accuracy of the metrics is of the utmost importance as it reflects the realities of customer operations, potential risks and future growth. In order to make economic information transparent, create a public and accurate source of supply, the Government is recommended to build a data warehouse on enterprises.

The State needs to have policies to encourage and bind businesses to publicly and transparently disclose financial data through audits to support sustainable development.

11  According to Nguyen Trong Hoai (2006), the phenomenon of information asymmetry occurs when one party holds information and the other party does not know the true level of information to a certain extent. This is a common phenomenon in developing countries. And its consequences lead to non-selective behavior and psychological favoritism in transactions.

There are policies to support and encourage independent credit rating agencies as a common reference base for credit rating work. Experience from developed countries is that it is necessary to form credit rating agencies that are not managed by the state but according to the share model, limiting the influence of organizations or individuals to falsify the rating results.

3.2.8. Enhancing the role of bank credit information centers, creating reputable credit rating agencies

Enhancing the role of the Credit Information Center

The State Bank must enhance the role of the Credit Information Center (CIC) to become the focal point for providing reputable assessments and ensuring objectivity, independence, and accurate reflection of credit quality. use of the rating object. In addition to synthesizing the ranking results of credit institutions, CIC also needs to develop its own rating system to serve as a reference basis for credit institutions.

According to the provisions of Circular 02/2013/TT-NHNN dated 21/01/2013 and Circular 09/2014/TT-NHNN dated 18/03/2014 amending and supplementing a number of articles of Circular 02, from the date of On January 1, 2015, quarterly, credit institutions and foreign bank branches will have to self-classify debts and off-balance sheet commitments based on customers' debt repayment ability as prescribed and then send the results of the analysis to customers. types of debt, off-balance sheet commitments for CIC. CIC will compile a list of customers according to the debt group with the highest risk level that credit institutions and foreign bank branches have classified and provided at the request of credit institutions and foreign bank branches. . Within a maximum period of 5 (five) days from the date CIC summarizes the list of customers, the credit institution or foreign bank branch must request CIC to provide the above list of customers.

types of debt, off-balance sheet commitments. In case a customer's debts and off-balance sheet commitments are classified into a group of debts with a lower risk than the debt group according to the list provided by CIC, credit institutions and foreign bank branches must adjust the results. debt classification, off-balance sheet commitments according to debt groups provided by CIC. Therefore, CIC plays an increasingly important role in customer ratings and is the center for correcting deviations in debt classification among credit institutions and foreign bank branches. CIC must complete the information supply system to quickly and accurately update the results of debt classification.

In order for the results of debt classification among credit institutions and foreign bank branches to minimize the deviation, it is necessary to have a common standard for the internal credit rating system. Currently, although the State Bank has required banks to build an internal credit society system, the State Bank has not yet issued a standard system for the construction of a credit society system, leading each bank to develop a credit society system. according to their development orientation and risk tolerance level. This leads to differences between the results of scoring the same customer. The fact that each bank builds its own credit rating system while lacking a unified framework leads to costly costs and resources. In order to standardize the results of customer debt classification among banks, the SBV needs to develop a common standard framework in line with international standards and regulations in Vietnam so that,

Formation of reputable independent credit rating agencies

Credit rating results of independent credit rating agencies are often objective and highly reliable. Therefore, having reputable and quality independent rating agencies will serve as the basis for comparing the ratings between these organizations, and between banks and these organizations. Both create comparison, and create motivation for the development of both banks and independent rating agencies.

3.3. Some proposals to improve Agribank's credit rating system

The credit rating system plays an important role in the credit activities of the bank, is the basis for the bank to make credit granting decisions, establish investment portfolios, select customers, develop policies. credit and risk management. In order for the credit rating system of the Agricultural Bank to become more and more complete and promote its role, it is the efforts of the Agriculture Bank itself and the unified, synchronous coordination and support from relevant departments. Here are some recommendations of the author to improve the credit rating system of Agriculture Bank:

Firstly, the Bank for Agriculture and Rural Development of Vietnam needs to build its own database . With a large scale, network of operations and a large number of customers, this is a valuable data source for Agribank to build its own highly reliable database to use for Agribank. Especially in Agribank's internal credit rating activities.

Second, check and adjust the rating system . Agribank needs to summarize the credit rating results to find out the cause of the errors between qualitative and quantitative scoring, run quantitative analysis models in combination with the advice of experts to adjust the score. adjust methods, criteria, weights... to suit. This analysis and verification is assigned to the Center for Prevention and Handling of Risks.

Third, to separate the work between the scoring department and the credit decision-making department  so that the rating can be objective and honest. Avoid the situation of "just kicking the ball and blowing the whistle". In addition, it is necessary to regularly train and improve the qualifications of staff on customer ratings to achieve the best results in risk management.

Fourth, build Vietnam's industry coefficient . Currently, there is no document of the Government regulating the development and publication of the industry index. Therefore, at present, these indicators are calculated and used by a number of industries, agencies and enterprises for certain purposes. Therefore, the data has no uniformity and reliability. Therefore, in the coming time, the Government should have a document regulating the development and publication of the industry index. The coordination between ministries and sectors, how to calculate the sectoral index, who is the implementing agency should have specific regulations for implementation. According to the author's proposal, the synthesis of data and calculation of the sectoral index should be assigned to the focal point for implementation, which is the General Statistics Office.

(CIC) .

Fifth, improve the role and capacity of the Bank's Credit Center

With the advantage of CIC, there is a fairly complete and up-to-date data source from organizations

credit because when customers incur outstanding credit, credit institutions must send information to CIC for synthesis. Therefore, CIC holds the exclusive right to provide credit information records to credit institutions. But over the past time, CIC's activities are still very limited. CIC's products are still simple, there are no in-depth analytical products to meet the increasing demands of banks. In order to standardize the classification of customers' debts, CIC needs to develop a standard framework according to international standards and suitable to Vietnam's conditions so that banks can build a credit rating system according to that framework. (There may be adjustments depending on the policy of each bank).

Conclusion Chapter 3

After analyzing the credit rating system of Agricultural Bank and comparing it with the internal credit rating systems of other commercial banks, the author has drawn the achieved results and the remaining limitations. existence of Agribank's internal credit system in order to propose solutions to perfect this system in line with Agribank's general development orientation. The recommendations are not only for the Agriculture Bank but also for the State Bank and government agencies related to credit rating. In order to maximize the role of the credit society system in general and of Agribank in particular in the economy, relevant parties need to cooperate and be active in perfecting the credit society system.


Internal credit rating is an important tool in risk management activities of commercial banks. Rating results are the basis for banks to select lending customers, develop customer and credit policies, build credit portfolios, and are the basis for debt classification and risk provisioning. . In recent years, the banking system has revealed many weaknesses in credit activities, high bad debts, due to objective reasons due to the impact of the global financial and monetary crisis and a Part of the reason is subjective from the bank's failure to strictly manage credit risk. The State Bank has focused on risk management orientation as required by Basel II through specific regulations, one of which is credit institutions,

Agribank's internal credit rating system has been built and put into use since late 2011, basically meeting the regulations of the State Bank and basic standards of Basel II. Through the application process, Agribank's credit rating system has clearly demonstrated its role, importance and is an indispensable tool for the bank's business activities, supporting the management and control activities. operations, credit management, risk management. In the process of operation, Agribank's internal credit rating system still has some limitations and will be overcome and perfected in the near future to maximize its role.

Due to certain limitations such as research time and access to bank data, the study has not comprehensively assessed Agribank's credit rating system. The topic suggests the direction of continuing quantitative research to re-test the suitability and accuracy of Agribank's ranking system, thereby adjusting the methodology, set of

criteria, weights ... to perfect the rating system in order to maximize the role of the rating system in banking risk management.


1.  ACB, Internal Credit Rating Manual for Corporate Customers.

2.  Agribank, Introduction information.

3.  Agribank, Decision 1197/QD-NHNo-XLRR: Issue regulations to guide the use and operation of customer scoring.

4.  Agribank, Decision 66/QD-HDTV-KHDN: Regulations on lending to customers in the Agribank system.

5.  Agribank, Decision 31/QD-HDTV-KHDN: Decision on some credit policies.

6.  Agribank, Credit Handbook, 2004.

7.  KPMG, 2013. Vietnam Banking Survey 2013.

8.  State Bank, Decision 493/2005/QD-NHNN: Decision on classification of debts, setting up and use of provisions to deal with credit risks in banking activities of credit institutions, Portal Ministry of Justice electronic news, 2005.

9.  State Bank of Vietnam, Circular 02/2013/TT-NHNN: Regulations on classification of assets, level of deduction, method of setting up risk provisions and use of provisions to handle risks in operations activities of credit institutions, foreign bank branches, Website of the Ministry of Justice, 2013.

10.  State Bank of Vietnam, Circular 09/2014/TT-NHNN: Amending and supplementing a number of articles of Circular 02/2013/TT-NHNN Regulations on classification of assets, deduction level, method of deduction establishment of risk provisions and the use of provisions to handle risks in operations of credit institutions, foreign bank branches, Website of the Ministry of Justice, 2014.

11.  Internal documents on audit activities of E&Y.

12.  Credit information center, Referral information.

13.  Vietcombank, Credit Manual, 2004.

14.  Websites:





Purpose of the target

Calculation formula / How to determine



Year old

Assess the influence of age on borrowers such as risk of life, illness, number of years of experience in the profession....

Determine the borrower's age through the

the following sources of information:

Identity card of the person

get a loan;

Borrower's birth certificate;

Information from the household or government agency where the borrower resides/temporary residence/business (Example:

police, Ward People's Committee...)


Academic level

Assess the borrower's education level

Judging on a person's qualifications

get a loan.

Assess the borrower's education level based on information sources


Borrower's qualifications;

Borrower interview;

Information from households or

government agency where the borrower resides/temporarily resides/does business



Assess the borrower's legal risk.

Criminal record assessment will be based on

legal background in the past as well as current status.

Determine the borrower's criminal background based on information sources


Borrower interview;

Information from the household or government agency where the borrower is located

residence/temporary residence/business (Example: police, ward People's Committee...)

Mass media

them (press, television, etc.)

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