Credit quality in student loans at the Social Policy Bank - Hanoi City Branch

use of loan

+ Adjust loan interest rates to suit reality

For the Social Policy Bank, Hanoi Branch, financial autonomy is always a difficult goal to achieve. The most important factor to ensure financial sustainability is the ability to cover operating costs. The activities of the Social Policy Bank, Hanoi Branch are not charity activities but are essentially a bank. Only by doing business to achieve development and sustainability can we create conditions for students to have long-term access to banking services.

In order for the operation of the Social Policy Bank, Hanoi Branch, to be stable and develop, and to gradually reduce dependence on the State budget, the Social Policy Bank, Hanoi Branch, needs to develop a roadmap to gradually reduce and eventually completely eliminate preferential lending interest rates. The preferential interest rates here only need to be preferential in terms of loan procedures, loan conditions, and loan terms. In the early stages, the extent to which policy beneficiaries need to borrow capital at preferential interest rates must be reasonably calculated, and in the future, they must be guided to market interest rates.

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Currently, the lending interest rate of the Social Policy Bank, Hanoi Branch is only equivalent to 55% of the market interest rate. This interest rate is lower than the average deposit interest rate of commercial banks. If comparing the lending interest rate of the Social Policy Bank, Hanoi Branch with the deposit interest rate of the same term of commercial banks, the lending interest rate of the Social Policy Bank, Hanoi Branch is much lower than the deposit interest rate of commercial banks. Therefore, maintaining the current interest rate means that the real interest rate of the Social Policy Bank, Hanoi Branch is negative.

In fact, it has been proven that students can completely accept bank loans with interest rates higher than the current lending rates of the Bank because they are more interested in the amount of capital borrowed, not just the interest rate. In fact, the lending programs for students currently being implemented by international organizations all apply market interest rates, even higher than the interest rates of commercial banks, but the loan repayment rate is very high. Thus, building an interest rate policy that ensures the development and financial autonomy of the bank is a prerequisite for the Social Policy Bank, Hanoi Branch, to operate sustainably. However, the

This cannot be done at once but requires a suitable roadmap. Specifically:

Phase 1: Implement the lending interest rate policy for policy subjects in the direction of preferential interest rates lower than the lending interest rates on the market but higher than the capital mobilization interest rates on the market. Specifically: Capital mobilization interest rates on the market < preferential lending interest rates < lending interest rates on the market. The lower rate of the interest rate of the Social Policy Bank, Hanoi Branch compared to the market interest rate is calculated based on the preferential level of taxes payable to the budget and the required reserve ratio at the State Bank... This is to ensure that the Social Policy Bank, Hanoi Branch, fully covers costs and has reasonable profits.

Phase 2: Implement a lending interest rate policy based on market interest rates. Market interest rates must include four components: capital costs, operating costs, risk compensation, and profit.

- Complete the inspection and control process in student loans

It is necessary to build a system to closely inspect, control and monitor credit activities. Improve the effectiveness of internal inspection and control activities associated with specific responsibilities. This must be considered an effective tool in the management of credit quality of the Social Policy Bank, Hanoi Branch.

Strengthen the team of internal inspection and audit staff with adequate moral qualities and professional qualifications and create necessary conditions and means for internal inspection and audit work to meet requirements and tasks.

Strengthen thematic inspection and control, according to the point inspection plan or on a surprise basis to promptly detect and correct shortcomings in lending processes and procedures. Coordinate and urge organizations to actively participate in checking loans, remind borrowers to repay debts and interest on time and in full; detect and notify banks of cases of improper use of capital and risks. Enhance the role and responsibility of organizations in checking loans, ensuring that the inspection is timely and of high quality.

At the Hanoi Branch of the Social Policy Bank's transaction offices at the district level where loans are made, it is necessary to closely coordinate with local authorities and socio-political organizations.

The association is entrusted to strengthen the work of checking, monitoring loans and urging the collection of overdue debts. At the same time, review loans, classify and evaluate loan status, debt recovery ability, ... thereby proposing appropriate handling measures.

It is necessary to develop a specific credit process, establish and divide tasks, powers and responsibilities in each lending stage, attach responsibilities and obligations to the entrusted socio-political organizations, heads of savings and credit groups, local authorities, and be responsible for material compensation when exceeding authority and allowing capital embezzlement and misappropriation.

- Standardize business processes to improve the quality of loans for students of the Social Policy Bank, Hanoi Branch.

Continue to research and improve business processes in a simple manner while still ensuring legal factors to facilitate students in loan procedures and reduce workload for loan officers.

With the characteristics of policy lending, the loan subjects are often poor people with low educational level, so the simpler and easier to understand the credit procedures (loan application procedures, disbursement procedures, loan repayment procedures, etc.) are, the more conditions people have to access bank capital more easily.

To do this, the Hanoi Branch of the Social Policy Bank, based on the regulations and rules issued by the Government, consulted the People's Committee and the Board of Directors of the Hanoi Branch of the Social Policy Bank to issue documents guiding the units of districts, communes and wards to develop a management mechanism for lending work in the direction of reducing administrative procedures in accordance with the actual situation of the locality, creating openness in implementation, eliminating obstacles and troubles in lending work.

On the bank side, the Business Departments continue to review and complete lending processes and procedures in the direction of simplifying procedures, making them easy to implement in practice but still ensuring compliance with credit principles issued by the State Bank. It is necessary to unify the forms of Confirmation Letters and Debt Repayment Commitments to create consistency in the implementation process at localities, training institutions and beneficiaries. Specific instructions are needed in the debt collection process.

more for special cases such as joining the army after graduation, exporting labor, households moving or being cleared from their old place of residence.

- Strengthen training to improve the qualifications of staff, workers and develop human resources.

In the banking sector in general and the Social Policy Bank, Hanoi Branch in particular, human resources are the most important issue, deciding the success of every task. Therefore, training staff is a regular and long-term task. In the coming time, the staff of the Social Policy Bank, Hanoi Branch will increase significantly to meet the demand for expanding lending to poor households and policy beneficiaries. Therefore, the bank also needs to pay attention to the unevenness in staff qualifications to have appropriate training directions.

Human resource development training needs to be conducted in a focused and specialized manner for each type of service, in the direction of determining specific titles for each professional position and work experience for each specific position. To do so, it is necessary to develop a standardization orientation for the staff of the Social Policy Bank, Hanoi Branch.

It is necessary to review the existing staff, have a plan for training and retraining, and supplement the shortcomings and weaknesses to improve professional qualifications and skills, and overcome shortcomings.

The staff of the Social Policy Bank, Hanoi Branch need to be trained in the basic skills of bank staff, these are the general professional skills that all staff need to grasp. These are:

- Marketing communication skills help staff attract customers, serve more with better quality.

- Information gathering skills help staff know how to collect and exploit useful information for the bank from customers and other sources, to serve their professional activities.

- Analytical skills help staff know how to assess and evaluate the situation on a scientific basis, thereby drawing conclusions and effective measures to continuously improve service quality.

- Negotiation skills help staff negotiate with customers to solve related problems with the most optimal solution.

In addition to professional knowledge and skills, cadres must also be regularly equipped with knowledge and understanding of law, market, economic and financial fields, information technology and foreign languages. At the same time, focus on political and ideological education for cadres, making them see their role, position and responsibility in the unit's activities, so that they can make more and more efforts in their work.

The salary mechanism and motivation in human resource development must also be built in the direction of: paying salaries according to the quantity and quality of completed work instead of paying salaries according to the current salary scale. For mountainous areas, remote areas, it is necessary to apply the form of on-the-job training to be able to exploit and use local human resources. Develop a process for recruiting staff, a process for evaluating and classifying workers according to the quality of work to then link it with training and arranging suitable staff. The expansion of the network must be linked to the standardization of the organization as well as the arrangement of the bank's payroll. For example, it is necessary to determine the criteria for limiting the number of loans, daily transaction volume, the number of books and documents that each credit officer, accountant and cashier must perform to avoid the current overload situation.

In addition to internal training, the Hanoi Branch of the Social Policy Bank also needs to have a specific strategy for training to improve the capacity of local partners in implementing loan management. The bank needs to have a training program for its collaborators, which are socio-political organizations in communes, districts, and provinces, on bookkeeping, loan recovery, and full and timely recovery procedures. Because in the long run, this is the main support resource for the bank's operations.

The Social Policy Bank, Hanoi Branch, needs to have a long-term staff planning, review and rearrange the staff, and focus on improving the quality of staff through a plan for training in professional expertise, legal knowledge and management skills. In the next 5 years, continue to attach importance to training and retraining of staff.

Consider this a regular and important task, both central and local levels have the responsibility to carry out.

- Strengthen information and propaganda work on loan policies for students in difficult circumstances.

Widely announce the student loan program and the training credit loan process.

Strengthen propaganda in specialized magazines and newspapers such as: banking magazine, economic times, banking times..., in addition to propaganda in newspapers and magazines that people are often interested in such as: Nhan Dan, Tien Phong, Phu Nu..., and mass media: television, radio...

Promote right at the bank by arranging for customers to see the bank's images, directly contact the staff, tools, equipment... to create trust, safety, comfort, and convenience for customers when coming to make transactions.

Provide timely information to the Ministry of Education and Training, the Ministry of Labor, War Invalids and Social Affairs and have a mechanism to inform schools about the number and list of students who are eligible for loans to coordinate in understanding the situation of loan use, information about subjects who are not eligible for loans (stopped studying, dropped out of school, disciplined, etc.) to recover debts later.

3.3.2. Recommendations to socio-political organizations

- Recommend that socio-political organizations receiving the mandate further strengthen coordination with local authorities and competent agencies to organize the integration of production and business programs and projects, restructuring, selection of crops, livestock, occupations, technology transfer programs, industrial promotion, agricultural promotion, forestry promotion, fishery promotion, market orientation with the implementation of policy credit in the area.

- Strengthen, rectify and improve the quality of entrustment to the Social Policy Bank. Strengthen inspection, supervision, improve the capacity and operational efficiency of lower-level socio-political organizations and savings and loan groups in implementing entrusted services.

Exploit with the People's Credit Fund. Direct the evaluation of loan objects, manage and guide borrowers to use loans effectively, repay debts and interest to the bank fully and on time.

3.3.3. Recommendations to local People's Committees

- Propose that local Party committees and authorities strengthen the direction of Party committees and authorities at all levels, enhance the responsibility of People's Committees at commune and ward levels in: implementing credit policies in the area; consolidating the Poverty Reduction Board to improve the quality of operations, effectively advising the People's Committees at the same level to manage and approve the list of poor households and beneficiaries of the VBSP's loan policy; direct village heads and residential group leaders to coordinate with the VBSP, socio-political organizations, savings and loan groups to strictly manage preferential credit capital in the area; monitor and help borrowers use capital for the right purpose and effectively; urge borrowers to repay debts and bank interest fully and on time; actively participate in handling overdue debts and bad debts.

- Propose that the Hanoi People's Committee direct the People's Committees of communes and wards to regularly review and promptly supplement poor households, near-poor households, and households with an average income per capita of up to 150% of the average income per capita of poor households. From there, there will be a basis for seriously implementing the confirmation of households borrowing capital from the Student Credit Program "in accordance with regulations " .

3.3.4. Recommendations to Central Ministries

- Relevant ministries and sectors are requested to improve the quality of training in training institutions and create more jobs for students so that they can find jobs soon after graduation and have income to repay the borrowed capital.

- The Ministry of Finance proactively coordinates with relevant ministries and branches and the Vietnam Bank for Social Policies to promptly advise the Government to consider and decide to adjust the loan level and interest rate in accordance with actual conditions in each period when tuition policy changes and living costs fluctuate.

- The Ministry of Finance, based on balancing the ability to respond from the budget, reviews, researches, and proposes specific policies on expanding the scope of household loans.

having difficulty because of having 2 children studying at training facilities that are currently not eligible for loans.

- The Ministry of Education and Training and the Ministry of Labor, War Invalids and Social Affairs have actively directed schools and training institutions under their management to properly confirm students to complete loan procedures and sign debt repayment commitments before graduation. Provide guidance and propaganda for students to have a sense of responsibility to repay debt immediately after graduation and have income. Propaganda for students to put debt repayment as a top priority.

- It is necessary to have synchronous measures to solve the problem of labor and employment in the context of economic downturn. First of all, there needs to be coordination between the parties: training units - enterprises - workers. In addition, the Department of Labor, War Invalids and Social Affairs should update labor market information to help trainers, employers and workers grasp and coordinate operations in a smooth and synchronous manner.

- The Ministry of Education can record the debt in the student's file. When graduating, the school will confirm this book and comment specifically on each year of the student's study, how much money has been paid or still owed. When all the debt is paid, the Ministry will stamp the student's certificate that the student has paid all the debt in that book.

3.3.5. Recommendations to the National Assembly and the Government

- Continue to pay close attention and direct ministries, branches, and the Vietnam Bank for Social Policies so that the credit program for students becomes increasingly sustainable and becomes a wing for all students to realize their dreams of studying.

- Propose that the Government has a policy project to support students who have borrowed money from the Social Policy Bank and graduated with honors to have the opportunity to find jobs to earn income to repay the debt to the Social Policy Bank.

- Propose that the Government study and supplement the loan subjects for families with 02 or more students studying at schools and training institutions that are not eligible for loans under current regulations, with the loan amount equal to the loan amount under general regulations for student credit.

- Propose that the Prime Minister study and adjust the loan level accordingly.

Credit quality in student loans at the Social Policy Bank - Hanoi City Branch - 15

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