Banks Flexibly Implement Loan Security Requirements for Customers

using loan capital because if the borrower does not use the capital for the right purpose or uses it correctly but ineffectively, it will cause the risk of capital recovery of the credit institution. Meanwhile, farmer customers need practical credit products, linked to their production and farming processes. This requires a form of credit in kind such as seeds, fertilizers, animal feed, etc. for farmers to be developed. These products will ensure that the loan capital is used for the right purpose, is close and practical, as well as create production and business motivation for borrowers, ensuring the implementation of the production and business plan. Providing credit in kind is easy to manage, easy to control the demand for loans, and easy to disseminate and instruct on product use for borrowers. This model, in essence, is no different from the form of lending each time, but it is a product that satisfies the requirements of credit institutions and borrowers.

- Commercial banks continue to deploy and expand the crop-season loan product and crop-season loan. This product provides credit for 2 or more consecutive production cycles with similar characteristics. The principal balance of the previous cycle will continue to be financed for the next consecutive production cycle. This form is applied to customers who have a credit contract, have outstanding debt and have reached the payment deadline but still need to borrow capital for the next production cycle. Borrowers must ensure that the project or plan they are borrowing is effective and have fully paid the outstanding interest of the previous credit contract. The maximum crop-season loan term shall not exceed the term of the next crop, the maximum loan amount shall not exceed the actual outstanding balance of the previous credit contract. Thus, when using this product, customers can use capital with a medium-long term, but nominally each loan is still short-term, creating favorable conditions for businesses and individuals to operate production and business activities according to the farm model but with a production nature that follows a cyclical, repetitive trend.

- Along with the diversification of credit forms of the commercial banking system, the capital transmission channel of the Social Policy Bank also continues to promote indirect lending to the poor, forming a lending mechanism for enterprises.

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Enterprises that invest in and build public works to serve households in new rural areas (such as schools, cultural houses, health stations, etc.). The preferential lending mechanism for enterprises that carry out public works to serve rural households and especially the poor in their locality of residence not only contributes to accelerating the implementation of the new rural construction program in the locality, but also contributes to improving the quality of life of people in a sustainable way. For this form of lending, enterprises, cooperatives, social organizations, etc. can access loan capital if they meet the requirements for the loan purpose of building public works (electricity, roads, schools, stations, etc.); the locality and local people where the loan project is implemented must enjoy special benefits, especially the poor and near-poor who are given priority and have preferential treatment in using public services.

- Strengthening supervision and improving the effectiveness of unsecured lending activities for poor households through groups: Traditional unsecured lending products all require a land use right certificate or a certificate of land without dispute from the local government. However, poor households today may not have residential land, only production land, and some households may only have production capacity and work for hire. Therefore, poor households in agricultural production areas cannot access credit capital for production if they do not have production land. In addition, most poor households in rural areas have low qualifications, no experience, and no techniques in setting up loan applications to ensure credit conditions of the Social Policy Bank. From the above difficulties, it requires close coordination and active support from banks in creating unsecured credit products more suitable for poor households, guiding, consulting, and directing loans for poor households to do business. However, with the characteristics of these loans, they are often small in scale, with a large number of loans, and have many potential risks while the bank itself is difficult to control and does not have experience or technology in the agricultural and rural areas. Therefore, to solve this problem, it is necessary to have unsecured credit products through groups and teams with close coordination between the bank and local organizations and associations. For this form

In this form, poor households in a commune who need to borrow capital but do not have credit guarantees, have production relations with each other, form groups, are supported with guidance on joint production, trained in borrowing capital, and then lend in the form of group credit. In the group, there is a representative responsible, and will not lend to all members of the group if there is a member in the group who does not fulfill his/her debt repayment obligations. This increases supervision and mutual support among members who borrow credit together; raises awareness and general debt repayment capacity of members in the group. The credit period for this form is short-term, less than 1 year, suitable for the production needs and annual capital turnover of customers.

3.3.2. Banks flexibly implement loan security requirements for customers.

To resolve problems regarding collateral when granting credit related to land use right certificates, banks need to flexibly handle the following cases:

- For customers who want to borrow large amounts of money, have a good credit history, have stable output contracts, long-term industrial crops, and land use right certificates without disputes, banks need to consider lending when they have land use right certificates for households to create conditions for customers to have enough capital for production and business activities, solve living needs, contribute to hunger eradication and poverty reduction, and limit the situation of high-interest credit in rural areas.

- For loans to invest in machinery and equipment, agricultural mechanization to implement large-scale fields, and clean technology agricultural models, the bank accepts to secure the loan with assets formed after granting credit.

- For business households participating in organizations, associations, cooperatives, and traditional craft villages, loan security is made in the form of guarantees from local organizations and associations with high legal value.

- For mountainous areas, areas under category 30a, forest land, agricultural land, gardens that have not been granted red books and allocated forest land, but have been cleared and used by households for many years, a certificate from the local government can be used to secure the loan.

3.3.3. Strictly comply with credit granting procedures and strengthen post-lending supervision.

- Credit institutions strictly comply with the loan approval process. Improve the quality of appraisal work so that credit institutions can make accurate investment decisions, contributing to preventing and limiting bad debts, ensuring capital safety for banks. Comply with current credit regulations, avoid arbitrary and sketchy appraisal. Comply with regulations on debt maturity division associated with customers' revenue sources and capital circulation capacity. Regularly update information on technical economics, information on industry development forecasts, market prices of products, etc. to serve the appraisal work and loan approval decisions.

- Strengthen post-disbursement monitoring activities for customers. Inspections can be conducted periodically, suddenly or publicly for all loans, conducted before, during and after lending, all stages of inspection are very important and the post-lending inspection stage will prove whether the above stages are correct or not. Closely manage credit quality to each branch of the bank, each credit officer and have timely handling measures, clearly assign responsibilities when consequences arise. Arrange and assign appropriate CBTD to each area, customer, arrange capable CBTD to take charge of key areas, large customers; maintain periodic swapping of areas. Implement lending associated with the provision of closed products and services such as opening accounts, guarantees, card issuance, etc. to limit risks as well as increase service revenue for the bank.

- For credit activities of the Social Policy Bank with the characteristic of transactions at the commune level, the transaction work must be carried out in accordance with the commune transaction process according to document No. 4030/NHCS-TDNN of the General Director, at the Commune Transaction Point, 100% of the entrusted Unions, Savings and Credit Groups come to the transaction to pay interest to the bank and participate in the meeting at the commune. Focus on the information board to fully and promptly publicize the new policies of the Government to help poor households and policy beneficiaries know, so that they can benefit and monitor related organizations. Regularly coordinate with Unions at all levels in the area to develop a plan to implement the

The loan entrustment stage and the supervision of the use of capital sources ensure the right purpose and effectiveness; have specialized staff for entrustment activities; open books to strictly and effectively manage capital sources; publicly review each borrower with the presence of the people, the participation of the Village Chief, Hamlet Chief and Party cell representative, organize meetings on the prescribed date to review members eligible for loans, prepare loan applications; at the same time, propagate, grasp and implement new documents and regulations on bank loan programs; proactively organize periodic and surprise inspections, or integrate inspections of entrustment activities at the Association's bases, Party cells/groups, in order to promptly detect arising problems, difficulties, and violations of agreed regulations, and at the same time have a plan to urge the collection of overdue debts and encroachment debts. Carry out monthly interest collection well by urging the Group Management Board to perform its tasks well. Through interest collection, the team staff regularly reminds borrowers to use capital for the right purpose and effectively, and at the same time helps the Social Policy Bank directly compare with borrowers about the loan debt to promptly detect errors. Credit officers need to promptly notify due debts and urge the collection of principal debt according to the period (sub-period) and collect principal debt when the final due date comes to create a habit for borrowers to consciously pay gradually, reduce the pressure to pay debt when due, and minimize overdue debt. Regularly analyze and evaluate the current situation and recovery ability of loans, must evaluate the current situation of 100% of overdue debts, frozen debts and debts proposed for cancellation to have appropriate recovery and handling solutions, specifically: For overdue debts, frozen debts that are due and can be recovered, the team leader and the organization of the Union must urge borrowers to repay the debt. For debts overdue for more than 90 days, if the borrower lacks the awareness to pay the debt, a list will be made and sent to the debt collection team at the commune level for urging and handling. For debts that are completely irrecoverable and at risk due to objective reasons, the relevant parties will coordinate with each other to prepare a file to request debt settlement according to the regulations of the Vietnam Bank for Social Policies.

3.3.4. Closely coordinate with local authorities, grassroots organizations and unions

Agricultural, rural and new rural construction lending activities

mainly implemented through the form of Savings and Loan Groups, through Associations and organizations, so the support from local authorities, associations and organizations at the grassroots level is extremely important, contributing significantly to the success of credit programs of credit institutions. Therefore, credit institutions need to coordinate with these organizations to implement lending in the following directions:

- It is necessary to pay attention to expanding lending through associations at all levels (Farmers' Association, Women's Association, Veterans' Association, Youth Union, etc.) and loan groups, because credit institutions cannot cover all areas, and credit officers are not strong enough to go to the site. Credit institutions in conjunction with Associations - Mass Organizations at all levels in the area need to develop a plan to implement loan entrustment stages and monitor the use of capital sources to ensure proper purposes and effectiveness; have specialized staff for entrustment activities; open books to strictly and effectively manage capital sources; publicly evaluate each loan subject with the presence of households, the participation of hamlet chiefs and Party cell representatives; organize meetings on the prescribed date to consider members eligible for loans, prepare loan applications;...

- CBTD should proactively organize regular and surprise inspections, or integrate inspections of entrusted activities at Association facilities, branches/groups, to promptly detect arising problems, difficulties, obstacles, violations of agreed regulations, and at the same time have a plan to urge the collection of overdue debts, bad debts, and proactively coordinate with Associations and Unions at all levels to have timely handling measures.

- Credit institutions coordinate more closely with local authorities in disseminating and implementing new documents and regulations on bank loan programs; collect information on occupations and economic situations of borrowers to provide loans in groups.

- Coordinate with the Department of Agriculture and Rural Development, Center for Agricultural Extension, Forestry Extension, Fisheries Extension, Plant Protection Center, Seed Research Center in localities to organize training, disseminate cultivation techniques, use of plant protection drugs,... for farmers. Linking lending activities with agricultural, forestry and fishery extension programs will limit risks in investment, helping rural people, especially the poor and policy beneficiaries, to use capital effectively.

improve living standards and repay bank loans on time. This will improve people's access to capital and gradually contribute to completing the criteria in building new rural areas.

- The Social Policy Bank proactively contacts relevant organizations and sectors in the area to develop and sign joint documents on coordination mechanisms for the purpose of supporting the poor in restructuring crops and livestock, applying science and technology, etc. Coordinate with the Department of Labor, War Invalids and Social Affairs, the Department of Agriculture and Rural Development, district agricultural offices and employment centers of socio-political organizations to effectively implement the coordination program.

3.3.5. Focus on developing the network of credit institutions in providing credit for new rural construction

To overcome the uneven distribution of credit institutions in agricultural and rural areas, many branches and transaction offices are concentrated in towns and townships, while in remote areas, the presence of transaction points is still too thin. This causes difficulties for people, businesses, farms, cooperatives, etc. in accessing banking services, as well as limiting the role of the banking system in promoting agricultural and rural economic development and new rural construction. Therefore, credit institutions need to focus on developing the credit institution network in the following directions:

- Banks operating in the agricultural and rural sectors continue to maintain and develop their networks in the traditional way. In addition, it is also necessary to consider expanding the transaction network in a reasonable and systematic way, such as establishing more branches in the district (districts with high population density should have more than one branch). This activity can help to partly solve the problem of bank branches being overloaded, customers having to wait a long time because the bank only operates within a specified time frame, so transactions are concentrated within the bank's business hours. In addition, it is necessary to consider opening more transaction points outside of business hours or on holidays so that people can

Flexible transaction time. For areas from commune level down, establish transaction points to save costs and resources.

- The characteristics of the vast rural area, farmers live scattered in villages, especially some remote communes. This makes it difficult for people to access credit as well as preferential policies. Therefore, credit institutions in the area participating in the rural financial market need to focus on strengthening the implementation and replication of the mobile transaction point model to remote villages and communes to bring banking services to serve farmers, helping farmers increase their access to formal credit. These mobile vehicles need to be equipped with sufficient machinery and equipment to provide a full range of basic products and services such as capital mobilization, lending, and money transfer to customers conveniently.

- Focus on building and developing electronic distribution channels, especially distribution channels via smartphones to increase people's access to banking and financial services. This distribution channel will save costs on human resources and facilities, remove geographical barriers and can be used flexibly in terms of time, not necessarily having to transact during business hours. To encourage and attract customers to use electronic distribution channels more, credit institutions need to increase promotion and introduce products suitable for customers provided through this distribution channel. In addition, credit institutions need to develop more attractive fee policies, contributing to the shift from traditional transaction channels to modern transaction channels.

3.3.6. Promote medium and long-term lending in accordance with the production conditions of borrowers.

Along with many lending policies serving agricultural and rural development, expanding the borrowers and increasing the credit limit, there are also many policies aimed at lending to large-scale fields, linked loans, value chain loans, and high-tech loans, which have promoted the increasing demand for medium- and long-term credit from borrowers in the agricultural and rural areas.

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