Solutions to promote the efficiency of consumer lending activities at Saigon Thuong Tin Commercial Joint Stock Bank

Collateral is an important condition for the bank to make a decision to lend to customers as well as the size of the loan. Due to the high risk of credit card activities, loans with special assets or guaranteed by a third party will increase the level of reliability and help the bank reduce risks than loans without special assets. However, nowadays, in order to attract customers, banks also lend to customers without special assets.

1.1.3. The role of consumer lending

CVTD is a service that brings many benefits to all participants.

For consumers

CVTD has a great meaning for customers who are consumers. The consumption needs of individuals and households are very large and frequent, but they do not always have enough financial resources to meet those needs. Thanks to CVTD, they can enjoy utilities and use the goods and services they want before they accumulate enough money. When meeting the conditions for credit, borrowers can purchase goods, especially real estate, right now when their prices are falling, or can travel on time. time.

Especially, in cases of urgent spending such as the need for health care and education, the role of credit card is even bigger and clearer. Currently, when banks pay more and more attention to consumer lending activities, in addition to satisfying their consumer needs, customers also enjoy a lot of incentives and utilities. Customers can borrow money with different terms and agree on a loan interest rate suitable for their borrowing purposes, can use other services such as money transfer, ATM card opening, Master Card, Internet Banking, etc. Mobile Banking,¼ For consumer loans at the bank, customers will have responsibility and sense of repayment, which is the motivation to strive, to improve their income in the future. Consumer lending activities help improve people’s lives, help them have a more comfortable and comfortable life, and improve their quality of life.

For economy

Credit card activities play an important role in stimulating demand, ie making the population’s spending increase, the demand for goods and services for daily life also increases. When the demand for consumption increases, it will stimulate production to develop, thereby, creating more job opportunities, reducing unemployment as well as social evils, and at the same time people’s incomes increase. up. In addition, the bank’s credit card products best satisfy the needs of consumers, thereby contributing to improving the quality of their material and spiritual life, thereby contributing to the development of society. healthier development.

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The development of credit portfolio increases business opportunities of enterprises. Due to support and encouragement, the needs of customers will be more and more diverse and richer, so manufacturers have the basis to make the right business decisions, in accordance with the needs. customers, helping business activities to develop more and more sustainably. Obviously, credit card not only plays an important role for entities such as consumers, commercial banks, and manufacturers, but also has macro significance for the entire socio-economy, contributing to the realization of sustainable development goals of each country.

For the bank

Consumer lending is a risky business, but it has great potential for growth. In addition to potential risks, lending banks earn interest rates suitable for those loans, helping to increase the bank’s income. Consumer lending helps increase the competitiveness of banks in the banking system and other credit institutions, thereby attracting new customers, expanding customer relationships, and improving reputation. of the bank. By expanding the network, diversifying products, and improving service quality, the number of customers using the bank’s services and facilities will be more and more, which is of great significance in building a bank image. The bank is not only interested in businesses that need loans, but also cares about the small and necessary needs of consumers, meeting the aspirations of improving consumers’ lives. Thereby improving the reputation and competitiveness of the bank. Promote effective credit card activities, in accordance with the provisions of law, apply reasonable lending interest rates to help economic growth, improve the efficiency of capital use, and increase the competitiveness of goods and services. The services of domestic banks help Vietnam’s banking system to develop more and more, service quality is increasingly improved and improved, and the economy is more stable and sustainable.

1.1.4. Classification of consumer lending activities

1.1.4.1. Based on loan purpose

According to the loan purpose, credit card activities are classified into real estate credit card and ordinary credit card.

Real estate credit: Banks often use real estate credit to finance the purchase of real assets – houses, apartments, shopping malls, office buildings, warehouses, land and facilities other substance. In banking operations, real estate loans can be short-term construction loans, paid in full in a few months or weeks, or long-term loans, lasting 20-30 years. . The average size of a real estate loan is often much larger than the average size of a typical loan, especially a small business loan. The target audience of banks are families with stable income (6-10 million VND/month). Banks lend up to 70-90% of the value of the house for a period of 10-30 years, with mortgages being houses purchased on installments, or guaranty properties of relatives such as father, mother, brother, Sisters and brothers ¼ The service of buying a house on installments or borrowing to build and repair houses is quite convenient, solving the needs of many families.

Ordinary credit cards: These are loans to serve the needs of improving life such as purchasing means of transport, living supplies, travel, study, medical or entertainment… These loans usually have Small scale, short funding time, therefore, the risk level for banks is lower than real estate consumer loans. Common CVTD products include:

– Loan to buy a car mortgaged by the purchased car: Is a credit product that supports capital to help customers buy a car to serve their travel, transaction and business needs, with collateral in the form of the car itself. buying.

– Study abroad loans: Help customers prepare financial resources in time to meet the learning needs of their children. Many banks are promoting this service to attract families with children to study abroad through extending loan terms or preferential interest rates.

– Installment loan for daily life: Is a credit product to support capital to help customers buy household items, repair houses, repair motor vehicles, do household business, pay tuition fees. , travelling, healing, funerals, weddings, and other essential needs in life.

– Lending, mortgage of savings books and valuable papers: A credit product for individual customers who own savings books and valuable papers and want to pledge their savings books and papers. have a price to borrow capital for production, business or consumption activities.

1.1.4.2. Based on the method of refund

Based on the repayment method, consumer loans are classified into one-time credit, installment credit, and revolving credit.

One-time payment CVTD: It is the customer’s payment to the bank once when it is due. This type of loan is usually applied to a small loan with a short loan term.

Installment credit card: means the business unit and customer determine and agree on the amount of loan interest to be paid plus the principal amount to be divided to repay over many terms within the loan term. This type of loan usually applies to loans of great value or the borrower’s recurring income cannot afford to pay off the loan in full.

Revolving credit card: A form of credit card in which a bank allows customers to borrow and repay loans in a recurring manner, up to a certain credit limit by using a credit card or by issuing an overdrafted check. based on the current account. Under this method, within a pre-agreed period, based on spending needs and income earned each period, customers are allowed by the bank to borrow and repay in many installments periodically, according to a certain limit. Credit.

1.1.4.3. Based on the origin of the debt

Depending on the origin of the debt, consumer loans are divided into two types: direct loans and indirect loans.

Indirect lending: A form of lending in which commercial banks buy back debts incurred by retail companies that have sold goods on credit to consumers.

Direct lending: A form of lending in which the Bank directly contacts customers; assess the legal capacity and financial capacity of the client; evaluate and score customers; disbursing disbursements; Monitor and collect customer debt.

1.1.4.4. Based on the form of loan guarantee

Based on the form of loan guarantee, credit CV includes the following types:

Credit card with collateral: is a form in which a consumer loan is secured by pledged assets.

Collateralized credit: Collateral can be formed from borrowed capital or other assets. This method requires borrowers to transfer legal documents proving the customer’s ownership of the property as collateral for the loan to the bank without transferring the ownership of the property to the bank.

Credit CV without special assets through a representative (Credit CV through unsecured): This form applies to borrowers who are employees with stable income.

In this method, the representative is the head of the unit, a reputable person who carries out loan procedures, receives loans from the bank for employees, collects principal and interest on behalf of the bank, the bank only works directly with the bank. representative.

Lending by other methods: Depending on the needs of customers and the actual arising, commercial banks will consider and lend loans in other methods suitable to the characteristics of operation in each period and not contrary to regulations. provisions of the law.

1.2. Efficiency of consumer lending activities at commercial banks

1.2.1. The necessity of promoting the efficiency of consumer lending activities

The effectiveness of credit card operations is the fact that banks improve and improve the quality of credit card products as well as lending activities in order to provide customers with the best loans, satisfy their needs and bring benefits to customers. row. In addition, the effectiveness of credit card activities is also demonstrated through the best control of loans so that the capital is used by customers for the right purposes, committed to comply with the agreements in the loan contract, approved The bank then recovers the principal and interest on time, bringing profits to the bank.

As a financial intermediary in the economy, the main and most frequent activity is receiving deposits and lending, in order to ensure the existence and development, the effectiveness of loans is always primary concern of commercial banks. Promoting the efficiency of consumer lending activities is an inevitable trend of banks when the consumer demand is increasing and at the same time, the requirements for service quality of customers for commercial banks are increasing. Commercial banks must constantly improve operational efficiency, innovate products, services as well as provide services in order to quickly, conveniently and safely meet capital needs and satisfy customers more. again. An efficient bank will help improve the image of the bank in the eyes of customers, help improve the reputation of the bank, thereby helping to attract more customers to the bank, increasing competitiveness. In addition, promoting credit card activities not only brings great profits to the bank, but also helps the bank reduce the risks encountered, thereby ensuring solvency and increasing the efficiency of the bank’s capital. row. The promotion of the efficiency of consumer lending activities helps customers improve their lives, satisfy urgent needs, and thereby promote the development of manufacturing industries and socio-economic stability.

1.2.2. Indicators to evaluate the effectiveness of consumer lending activities

1.2.2.1. Qualitative indicators

An effective consumer loan is a loan that ensures the correct and complete implementation of all steps in the lending process and that the procedures are processed quickly and conveniently for customers but still ensure the safety principles. certain rules and regulations.