Accounting for Non-State Bank Lending Operations.

Thus, to have a credit contract between the Bank and the customer requires a large number of documents to guarantee the loan. On the Bank's side, using many types of documents will ensure the safety of each loan, but the management of documents for accountants will be difficult. However, for the loan accounting department at Hanoi Agricultural Bank, the loan records are stored safely, the archived records are arranged in separate categories for consumer loans, mortgage loans, private enterprise loans, etc.

2. Accounting for non-state-owned bank lending operations.

Hanoi Bank for Agriculture and Rural Development applies the form of loan by item to all economic sectors in need of loans.

In Chapter I, we learned the advantages and disadvantages of loan by item and loan by credit limit, but due to the problems with the binding conditions when lending by credit limit, the Bank has not applied this form of lending.

For the form of loan by item, the Bank has introduced measures to overcome disadvantages such as reducing complicated paperwork procedures to create favorable conditions for customers to borrow capital as well as accounting officers to lend.

For example: For loans that are disbursed multiple times, customers now only need to make a contract for that loan account, not having to make a separate loan paper each time they borrow.

By applying the loan method, the Bank has been proactive in the process of using capital, each loan has a fixed repayment period. The loan accountant only keeps the debt receipt, so it is easy to track the debt period and calculate the effectiveness of each loan.

2.1 Accounting for loan disbursement phase

After receiving the loan application, the loan accounting department checks its validity and legality, and guides the customer to prepare documents to release the loan into the file for tracking.

The accountant records the date and amount of withdrawal on the loan agreement and records it.

Account Debit: Loan from unit (or individual)

Account: Cash (if lending in cash)

or Account: Of the beneficiary (if lending by transfer)

(section)

For non-state-owned units that borrow with mortgaged or pledged assets, each time the accounting is performed, the accountant records the entry into the off-balance sheet account "Mortgaged or pledged assets".

At Hanoi Agricultural Bank, loans are mainly made by bank transfer. Due to its location in a very convenient area, densely populated, and growing production and business, most of the borrowers are large companies and enterprises (state-owned and non-state-owned) with deposit accounts at the Bank such as Agricultural Materials Corporation, Phap Van Agricultural Materials Company, Hanoi Metal Company...

Through the loan disbursement by transfer, when customers withdraw capital, the Bank will be very convenient in controlling whether the business's loan capital is used for the right purpose or not. In addition, from the "money creation" function of the Commercial Bank, it is the ability to expand deposits many times through lending by transfer. Thus, through the lending business by transfer and the close combination of non-cash payments, Hanoi Agricultural Bank is increasingly expanding its deposit sources.

Total non-state economic lending turnover in 1999 and 2000 was as follows:

Table 6: Non-state economic loan turnover in 1999 - 2000

Unit: Million VND

Year

Target

1999		2000
Amount	Proportion(%)	Amount	Proportion(%)
- Total loan turnover	30,831	100	123,175	100
National Assembly
- Short term loans	28,237	91.6	114,090	92.6
- Short and long term loans	2,594	8.4	9,085	7.4
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2000 )

(Source taken from 1999 consolidated balance sheet -

2.2 Accounting for debt collection and interest collection stages.

2.2.1 Accounting for principal collection phase.

Pursuant to Article 10 and Article 24, Decision 06/QD/HDB dated January 18, 2001 of the Board of Directors of Vietnam Agricultural Bank on "regulations on lending to customers".

"The collection of loan debt according to the agreement in the credit contract, when the repayment deadline or the end of the loan term comes, if the customer cannot repay the debt on time and the repayment term is not adjusted or the debt is not extended, the due debt that cannot be paid must be transferred to overdue debt and the customer must pay overdue interest on the late payment penalty"

"In case the debt is due but the customer has not paid the debt due to objective reasons such as natural disasters, epidemics, price fluctuations that are not beneficial for product consumption and other force majeure reasons, the customer must submit a request for debt extension to the Agricultural Bank where the loan is made before the due date for the Agricultural Bank where the loan is made to consider and decide.

"The maximum debt extension period for short-term loans is equal to the agreed loan term or one production or business cycle but not exceeding 12 months. The maximum medium and long-term loan term is equal to half of the loan term agreed in the credit contract."

Accounting for medium and long-term loans and debt collection at Hanoi Agricultural Bank is carried out according to the usual method similar to accounting for short-term loans and debt collection.

When the debt is due, customers go directly to the Bank to pay or

The bank deducts from the customer's deposit account to collect the debt.

When the borrower repays the debt, the accountant will base on the documents to record it into the appropriate account.

If the unit pays in cash, account for:

Debit account: Cash (1011): principal

Credit account: Borrower's loan: principal. If the unit pays by transfer, record: Debit account: Borrower's deposit: principal

Credit account: Borrower's loan: principal.

If the customer pays off the debt, the accountant will finalize the contract and save it with the voucher log, which will be preserved for a long time according to State regulations to serve the inspection and control of all activities of the unit.

In case the customer has not paid off the debt by the due date and the Bank does not consider extending the debt, the accountant will transfer it to overdue debt and record it.

Account Debit: Overdue debt (of customers) Account Credit: Loan from customers

At the same time, transfer the credit agreement or contract to the overdue debt group.

and record the date of the overdue transfer of that contract or agreement.

In case of request for early repayment according to regulations, interest shall be calculated based on the actual number of days that the unit uses the loan amount.

Through the actual survey, it is shown that the implementation of loan accounting at the Hanoi Bank for Agriculture and Rural Development is very good, so although the number of customers coming to transact is very large, the loan accounting staff still monitors, records loans, collects debts, transfers overdue debts in a timely, complete and accurate manner, and does a good job of providing information to credit officers in a timely manner.

Total debt collection turnover in 2000 was: 2,786,692 million VND. Due debt collection turnover: 2,720,093 million VND. Overdue debt collection turnover: 66,599 million VND.

2.2.2 Accounting for interest period.

At the Hanoi Bank for Agriculture and Rural Development, for non-state economic sectors as well as state-owned economic sectors, loans are applied with monthly interest calculation, interest payment is made monthly when the principal has not yet reached maturity and principal and interest are paid simultaneously when due.

For state-owned economic sectors, interest is paid on the 25th of each month, and for non-state-owned economic sectors, interest is paid regularly after 1 month from the date of borrowing.

Interest calculation at the Bank for Agriculture and Rural Development

Hanoi is calculated by the product method.

Interest calculation product = Loan account balance ô Number of days of loan use.

The calculation formula is as follows:

Interest on the total monthly product of the loan account

=  Monthly loan interest rate

30 day receivables

After calculating interest, the accountant makes a receipt (pay in cash) or makes a

Transfer slip (if by transfer) accounting:

Account Debit: Payment deposit to the borrowing unit (if paid by bank transfer)

or cash account 1011 (if paid in cash)

Credit: Bank interest income.

Interest receipt or interest transfer slip is made in 2 copies: 1 copy of the interest calculation slip is used as an accounting document, 1 copy is used as a receipt to be paid to the borrower when the interest is collected.

In case the interest is due but the customer cannot pay, after calculating the interest, the accountant will record it off the balance sheet: Enter account 94 "Uncollected interest" and track when the customer has money to collect.

When interest is recovered, the accountant records: Export account 94 "Uncollected interest" and simultaneously record on the balance sheet and record:

Account Debit: Customer Deposit: Interest Amount

or Account: Cash 1011 (If customer pays in cash)

Credit account: Bank interest

Interest collection vouchers or interest transfer vouchers are made in 2 copies: 1 copy of the interest calculation voucher as an accounting document, 1 copy as a receipt or returned to the borrower when the interest is collected.

In case the interest is due and the customer cannot pay, the accountant will record it off the balance sheet after calculating the interest: Enter the 94% uncollected interest account and track it until the customer has the money to collect.

When the interest is recovered, the accountant records: export account 94 'Uncollected interest' and simultaneously records on the balance sheet and records:

Account Debit: Customer Deposit: Interest Amount

Or account: cash 1011 (if customer pays in cash)

Credit account: bank interest

Interest collection at Hanoi Bank for Agriculture and Rural Development is strictly implemented according to the principle of collecting interest first, then collecting principal. Therefore, although the loan turnover is large, the loan accounting is still good, meeting the requirements of credit work without any errors.

Interest collection on loans at the Bank for Agriculture and Rural Development

Hanoi in 1999 and 2000 is shown: 1999: 51,684 million VND

Year 2000: 62,141 million VND

The posting of uncollected interest and the 'uncollected interest' account is correct,

But the problem is when will the revenue be collected when accounting for this?

This issue is not specifically mentioned in the regime. The new credit regulations for economic organizations stipulate that "if the borrowing unit cannot pay interest when due, the credit institution will calculate and record it in the off-balance sheet account for gradual collection, without adding interest to the principal."

Implementing the above regulation at the Hanoi Bank for Agriculture and Rural Development, when customers come to pay their debts, the Bank focuses on collecting interest first, then principal. If the interest is not collected enough, the remaining interest will be entered into the off-balance sheet account "uncollected interest" and the principal will be transferred to overdue debt.

In case the customer does not have money to pay both interest and principal, the accountant will calculate the interest and enter it into the off-balance sheet account "uncollected interest", and the principal will be transferred to overdue debt.

In the regime that does not specify which amount the accountant will collect first when a customer comes to pay overdue debt and uncollected interest. At Hanoi Agricultural Bank, the "uncollected interest" will be collected first, then the overdue debt will be collected. The reason for the above accounting collection is because "uncollected interest" does not include interest, so the accountant collects "uncollected interest" first to reduce losses for the Bank.

Debt collection situation of non-state-owned units of Hanoi Bank for Agriculture and Rural Development in 1999 - 2000.

Table 7: Debt collection turnover of Hanoi Bank for Agriculture and Rural Development in 1999-2000.

Unit: Million VND

Year

Target

1999	2000
-Non-state debt collection turnover.	31,821	81,769
- Short-term debt collection.	30,011	79,026
- Debt collection in the short and long term	1,810	2,743

(Source taken from the 1999 - 2000 consolidated balance sheet)

The above table shows that the debt collection work of the Hanoi Bank for Agriculture and Rural Development increased by 49,948 million VND compared to 1998, with an increase rate of 156.9%.

Short-term debt revenue in 2000 was 79,029 million VND, an increase compared to the year.

1999 is 49,015 million VND, accounting for 163%.

Medium and long-term debt collection turnover in 2000 was 2,743 million VND, an increase compared to

in 1999 it was 933 million dong, accounting for 51.5%.

2.3. The issue of early principal repayment for installment loans.

As analyzed in the beginning of chapter 2, capital mobilization and capital use are the two main activities of Commercial Banks. Good capital mobilization will create a solid financial foundation for the Bank to perform its role and function in the economy and at the same time create the initiative of the Bank, because if capital is mobilized but the bank does not have measures to use the capital appropriately, it will lead to capital stagnation, causing interest rate risks. Meanwhile, the bank still has to fulfill its obligations to the budget and still has to pay interest on deposits to customers.

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