Currently, the branch's credit policy for consumer borrowers is still quite strict, it is difficult for consumers to get loans and there are many obstacles to improving the quality of credit cards. Therefore, it is necessary to adjust credit policy towards more flexibility and openness to consumer loans.
Currently, the main audience that spends on consumer loansare individuals with collateral and state employees with stable incomes to ensure loan repayment. However, these regular customers represent only a small part of the population. Meanwhile, in Hanoi city and Ba Dinh district, people who need consumer loans such as small businesses, then fresh graduates are working for joint ventures, joint stock companies, and so on. In part, foreign companies are very numerous. They also have stable income and high solvency. This is the source of potential customers that the Branch needs to have policies to exploit, the quality of consumer loans for these customers is still limited. The branch needs to improve the quality of its old consumer loan products and provide new high quality products to the above customers.
Regarding interest rates, at the current branch, interest rates for consumer loans are usually 2% higher than for business loans by about 2% a year. Although consumer loans have a higher risk, it does not really match the reality because the purpose of consumer loans is to spend, to satisfy the borrower's consumption needs, not to borrow to earn interest. Therefore, branches need to apply diverse interest rates for each type of customer, in order to create a balance between the bank's interests and the interests of customers. Specifically, the branch needs to develop a flexible interest rate policy according to the borrower: with familiar and reputable customers, the branch can apply a preferential interest rate. That strengthens long-term relationships with customers, both encouraging customers to strengthen relationships with branches, and actively doing business effectively,Pay interest and principal on time to the bank. As for uncertain loans, higher interest rates will apply.
The changes in the above-mentioned lenders and interest rate policy will certainly help the branch operate more efficiently, thereby improving the quality of consumer loans, promoting the process of improving the quality of credit card in the bank. branch.
For the method of recovering principal and interest, the branch currently still applies the method of periodic payment according to the debt term. However, for some business people, the source of income only arises irregularly, this method causes difficulties for them when the repayment period comes. Or for those whose income does not coincide with the repayment period, periodic interest payments will be very difficult.
To solve this difficulty, the branch may consider a solution on consumer lending through a representative. The representative in this loan method is usually the person in the unit with loan staff, responsible for collecting loan applications, collecting principal and interest of the borrower. In order to ensure the rights of the representatives to encourage them to do well in their assigned responsibilities, there should be some incentives such as: periodically deducting bonuses based on % of the actual profit and supporting travel money when it is time to repay. However, the bank also needs to be aware of the responsibility of the representative in this form of lending. If the bank does not have strict supervision and inspection, it may lead to a situation where the representative abuses the credit to appropriate the borrower's repayment, affecting the lending and debt collection.Therefore, clearly defining the rights and responsibilities of each party involved is very important and needs to be carefully considered. The solution through the representative helps the branch improve loan quality, make it easier to collect interest, attract more customers at the same location, thereby, supporting activities to improve the quality of loans. credit card volume at the branch.
3.3 Some recommendations
3.3.1 Recommendations to the Vietnam Bank for Industry and Trade
Branches are part of the Vietnam Bank for Industry and Trade system. Therefore, all activities of the branch are directly affected by the operation of the Bank for Industry and Trade of Vietnam. Therefore, the Bank for Industry and Trade of Vietnam needs to have an impact to support the branch in implementing solutions to improve the quality of credit records. Specifically:
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- Directing the branch's credit activities to improve the quality of consumer loans.
- Create a mechanism for branches to be more proactive in choosing services and funding needs.
- Together with the branch, develop a lending process suitable for consumer loans, adjust lending conditions and credit policies in a more flexible and flexible way for consumer borrowers.
- Financial support for the branch to enhance the activities of introducing the image and promoting the brand.
- Implement advertising and sponsorship programs for events so that the brand name of Vietnam Commercial Bank becomes more popular, creating favorable conditions for the branch to attract more customers, thereby promoting motivation. force to improve the quality of credit card at the branch.
- Support the training, improve professional capacity of leaders as well as branch staff.
- Strengthening the inspection to ensure that the improvement of the quality of credit records of the branch must be associated with the growth of the proportion of credit records in lending activities at the branch, ensuring the safety of the branch's operations and of the whole. Vietnam Bank for Industry and Trade.
3.3.2 Recommendations to the State Bank of Vietnam
- Creating a stable environment for the development of the financial and monetary market, which is a condition for commercial banks in general and branches in particular to increase capital mobilization and improve the quality of lending activities.
- Promulgating specific guiding documents on credit promotion, building a legal corridor to create conditions for commercial banks to relax loan conditions for consumer loans.
- Allow commercial banks to be more proactive in their business activities. Commercial banks can make their own regulations on lending policies to make their lending activities more flexible.
- Support commercial banks to expand international cooperation relations. International cooperation is a way for commercial banks to learn and absorb new technologies, operating methods and development trends of foreign banks. As a result, domestic commercial banks have improved the quality of their operations, gradually moving towards a modern banking model. The quality of consumer loans is therefore also improved.
3.3.3 Important recommendations to the Government and relevant competent authorities
First of all, the Government needs to maintain the stability and development of the economy. In 2007, the inflation rate in our country reached 12.6%. The increase in the inflation rate has not shown any signs of stopping, when only in the first quarter of 2008, the consumer price index increased by 5%. These are bad fluctuations, greatly affecting the health of the economy and the operation of the commercial banking system. In conditions of high inflation, people's need to deposit money will decrease. Deposit mobilization activities of banks will be very difficult and of course, lending activities in general and consumer lending in particular will also be negatively affected. Therefore, the Government must have careful management to stabilize prices, control inflation, and stabilize the economy. That is the macro-environmental condition for the branch to continue to increase capital and improve the quality of credit portfolio.
The reform of administrative procedures and improvement of the legal environment also need to be implemented immediately. A unified system of legal documents will help consumers avoid difficulties and embarrassment in the loan process. The simple and compact administrative procedures will help the lending activities take place more smoothly and easily. Management agencies must constantly improve their capacity and qualifications.
In addition, consumers also need the State's support in supporting and protecting consumers' interests. The State and agencies promulgating mechanisms and policies need to provide information in the form of opening training courses, training courses, information centers, and publishing it widely on mass media for consumers. use timely access.
In short, for the quality of consumer loans to be improved, the branch's own efforts are not enough. Synchronous coordination from the Bank of Industry and Trade of Vietnam, the State Bank of Vietnam, from the Government and competent agencies is very important. Changes and reforms in the operation of these agencies will help branches effectively implement solutions to improve the quality of consumer lending.
In recent years, the banking market has become extremely competitive, and business lending, which is the traditional strength of commercial banks, is becoming more and more difficult. In that context, the consumer lending market is considered as a potential market for commercial banks to diversify investment portfolios and improve profits. Banks are tending to improve the quality of consumer loans, thereby attracting a large number of consumer borrowers to them. Consumer lending is a completely new and very potential market. Ba Dinh Branch of Industry and Trade Bank is also following that trend. The study of the current state of the branch's consumer lending quality shows that this activity has achieved many remarkable results, but these results are still not commensurate with the branch's position and potential.The branch's consumer lending activities also have many limitations that need to be overcome.
Ba Dinh district - the branch's operating area is the economic - cultural - political center of the capital. With that position, Ba Dinh District's economy will continue to grow at a high rate. Moreover, most residential areas in Ba Dinh district have high income levels, high consumption demand and quality. This is really a potential market for the branch's credit activities. Therefore, branches need to quickly implement solutions to improve the quality of consumer loans. Moreover, those solutions must be implemented with great investment and determination, in order for the activities to improve the quality of consumer loans to be really effective, contributing to strengthening the branch's strength in the daily life. compete with Vietnamese and foreign commercial banks.
List of references
1. Peter S. ROSE – Commercial Banking Administration – Financial Publishing House.
2. Commercial banking textbooks Statistics.
- National Economics University - Publishing House
3. Current documents related to credit work in the Vietnam Bank for Industry and Trade system
4. Summary report of Ba Dinh Bank branches 2005-2007
5. Report on consumer loans in 2007
6. Bank Magazine Ba Dinh Bank branch 2005-
7. Vietnam Economic Times (www.vneconomy.com.vn)
8. Website of the State Bank of Vietnam (www.sbv.gov.vn)
9. Other Magazines and Websites.
List of Tables
Table 2.1 Capital mobilization Table 2.2 Credit activities Table 2.3: Accounting profit
Table 2.4 Loan balance structure by term Table 2.5 Loan turnover of branches
Figure 2.1 Mobilization structure Figure 2.2 Loan balance
Figure 2.3 Overdue debt ratio
Figure 2.4 Credit balance structure by term Figure 2.5 Loan structure by subject
List of abbreviations
CVTD Consumer loans
Commercial Banks Commercial Banks
SBV State Bank
Branch of Commercial Bank BD Ba Dinh Branch of Industrial and Commercial Bank
CHAPTER 1. CONSUMER LIVING ACTIVITIES OF COMMERCIAL BANKS - BASIC THEORY ISSUES 3
1.1 Lending activities of commercial banks 3
1.1.1 Basic Operations of Commercial Bank 3
184.108.40.206 The concept of commercial bank…………………….. 3
220.127.116.11 Basic operations of commercial banks 7
1.1.2 Lending activities of commercial banks 16
18.104.22.168 The concept of lending activities 16
1.2 Consumer lending activities of commercial banks………………..18
1.2.1 Concept of consumer lending activities of commercial banks 18
1.2.2 Consumer lending process of commercial banks…………………… 25
1.2.3. Improving the quality of consumer loans of commercial banks….… 28
1.3 Factors affecting the improvement of consumer lending quality of commercial banks 30
1.3.1 Subjective factors… 30
1.3.2 Objective factors… 33
CHAPTER 2. CURRENT LIVING SITUATION OF BA DINH BANK FOR INDUSTRY AND TRADE 36
2.1 Overview of Ba Dinh Branch of Industry and Trade Bank……………….36
2.1.1 History of establishment and development of Ba Dinh Branch of Industrial and Commercial Bank 36
2.1.2 Organizational model… 38
2.1.3 Operation of the Branch in the last 3 years 40
22.214.171.124 Fundraising activities… 40
126.96.36.199 Credit activities… 42
188.8.131.52 Business results 45
2.2 Current status of branch's consumer loans…………………………………………………… 45
2.2.1 Legal basis for consumer lending activities at Ba Dinh Branch of Industry and Trade Bank 45
2.2.2 Types of consumer loans at Ba Dinh Branch of Industry and Trade Bank 46
2.2.3 Loan conditions at Ba Dinh Branch of Industry and Trade Bank…….47
2.2.4 Consumer lending process at Ba Dinh Branch of Industry and Trade Bank 56
2.2.5 Situation of consumer lending at Ba Dinh Branch of Industry and Trade Bank 56
2.3 Assessment of consumer lending situation of Ba Dinh branch of Industry and Trade Bank… 62
2.3.1 Achievements of the branch in consumer lending… 62
2.3.2 Limits and reasons for branch consumer lending…………………… 63
184.108.40.206 Limit 63
220.127.116.11 Cause… 64
CHAPTER 3. SOLUTIONS TO ENHANCE THE QUALITY OF CONSUMER LOANS OF BA DINH INDUSTRY AND TRADE BANK BRANCH……69
3.1 Development orientation of the branch's consumer lending activities in the coming time 69
3.1.1 Consumer loan demand in the coming time 69
3.1.2 Development orientation of the branch's consumer lending in the coming time 70
3.2 Solutions to improve the quality of consumer loans of Ba Dinh Branch of Industry and Trade Bank… 71
3.2.1 Strengthening of capital mobilization……………………………………………… 71
3.2.2 Strengthening marketing activities to improve the quality of consumer loans… 73
3.2.3 Diversifying types of consumer lending products… 77
3.2.4 Develop customer policy towards more openness towards consumer borrowers… 78
3.3 Some recommendations 80
3.3.1 Recommendations for Vietnam Bank for Industry and Trade 80
3.3.2 Recommendations to the State Bank of Vietnam 81
3.3.3 Recommendations to the Government and relevant competent authorities…..82