LIST OF TABLES AND FIGURES
Table 2.1. Current status of land use in Van Ban district in the period 2016-2018 25
Table 2.2: Population and population growth of Van Ban district in the period 2016-2018 27
Table 2.3: Current labor situation in Van Ban district in 2017 and 2018 28
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Table 2.4. Production value in the period 2016-2018 30
Table 2.5. Production value structure in the period 2016-2018 31
Table 3.1. Capital mobilization situation of Agribank branch in Van district
Table 2016-2018 period 41
Table 3.2. Outstanding loan situation over the years 2016 -2018 43
Table 3.3. Business performance results of Agribank Van Ban in the period 2016-2018 44
Table 3.4. Scale and growth rate of Agribank's agricultural production loans
Van Ban from 2016-2018 50
Table 3.5: Outstanding loans for agricultural production by time of Agribank, Van Ban district branch, 2016-2018 52
Table 3.6: Forms of loan guarantee for agricultural production 53
Table 3.7: Branch bad debt ratio and bad debt ratio for loans to SXNN 54
Table 3.8. Customer opinions on loan amount, term and interest rate 55
Table 3.9. Customer opinions on loan procedures and wishes
of the Bank for Agriculture and Rural Development 56
Table 3.10. Customers' opinions on the working attitude of employees of the Bank for Agriculture and Rural Development 57
Figure 2.1. Organizational model diagram of Agribank - Van Ban district branch
- Lao Cai province 34
THESIS SUMMARY
Author name: Chu Hong Ha
Thesis title: Developing agricultural production loans at the Bank for Agriculture and Rural Development of Vietnam, Van Ban district branch, Lao Cai province
Industry: Rural Development Code: 8.62.01.16
Research purpose
From the assessment of the current situation of agricultural production lending at Agribank Van Ban branch, propose solutions to develop agricultural production lending at Agribank Van Ban branch, Lao Cai province.
Research methods
The thesis uses secondary and primary data collection methods, disaggregation methods, and comparison methods to evaluate the current situation of agricultural production loans of Agribank, Van Ban branch, Lao Cai province.
Main results and conclusions
The thesis has evaluated the credit activities at Agribank Van Ban branch, Lao Cai province and the current situation of agricultural production lending at Agribank Van Ban branch. From there, the thesis proposes solutions to develop agricultural production lending at Agribank Van Ban branch, Lao Cai province in the coming time.
INTRODUCTION
1. Urgency of the topic
Vietnam Bank for Agriculture (Agribank) is a large financial institution with widespread influence. In recent times, Agribank has made many efforts in providing capital for the economy. In particular, with a network covering almost all localities, Agribank has created conditions for businesses and people, especially people in remote areas, to access official credit sources, contributing significantly to promoting economic and social development, supporting high economic growth, promoting economic restructuring in general and the agricultural sector in particular, contributing to sustainable poverty reduction and limiting usury in rural areas. Agribank has made an important contribution to lending to the agricultural and rural areas. As a result, outstanding agricultural and rural credit by the end of 2018 is estimated at about 1.69 million billion VND, an increase of 14.5% compared to the end of 2017 (higher than the general credit growth of the economy) with more than 14 million customers with outstanding loans; accounting for nearly 24% of total outstanding loans to the economy. However, lending to agriculture and rural areas still faces many barriers such as:
Firstly, agricultural production is a field with many potential risks, but risk handling and prevention mechanisms such as agricultural insurance have not been strongly implemented. This reality greatly affects the financial capacity and ability to repay bank loans of customers when facing risks in production and business.
Second, agricultural production is still fragmented and small-scale; production according to the value chain has not been organized and developed properly; the level of deep processing is still limited, so the added value is low. The linkage models are still few and ineffective due to the lack of tight linkage contracts, the phenomenon of violating linkage contracts by people and key enterprises is still common due to low awareness and weak sanctions, causing
Difficulty for credit institutions (CIs) in controlling cash flow when
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chain lending. These difficulties reduce production and business efficiency and credit investment efficiency in the agricultural and rural sectors.
Third, the agricultural product consumption market is unstable, the imbalance between supply and demand, production and consumption, and export of agricultural products often occurs, while market analysis, forecasting, and planning are still inadequate. Many businesses and households do not have good financial resources, there are not many effective and systematic high-tech agricultural production models, and the loan repayment plan is not feasible, creating pressure on risk management for credit institutions.
Agribank Van Ban District Branch is the unit that accounts for the majority of the lending market share in the area. Therefore, the credit of Agribank Van Ban Branch has played an important role in the development of agricultural and rural economy in the district. However, besides the achievements, the above-mentioned barriers of the banking system still exist at Agribank Van Ban Branch. To promote the development of lending (SXNN) in the coming time, a series of obstacles and shortcomings mentioned above, both for the lender and the borrower, need to be gradually removed. Based on the above reality, I have chosen the topic : "Developing lending for agricultural production at the Bank for Agriculture and Rural Development of Vietnam, Van Ban District Branch, Lao Cai Province" for research.
2. Research objectives
- Systematize theoretical and practical basis on developing agricultural production loans of commercial banks.
- Assessing the current status of agricultural production loan development at Agribank, Van Ban district branch, Lao Cai province in the period 2016-2018.
- Proposing solutions to develop agricultural production loans at Agribank, Van Ban district branch, Lao Cai province until 2025.
3. Research object and scope
3.1. Research subjects
The research object of the topic is the agricultural production lending activities of Agribank, Van Ban district branch, Lao Cai province.
3.2. Scope of research
- Spatial scope: Research topic at Agribank branch in Van Ban district, Lao Cai province.
- Time scope: Secondary data was collected in the 3-year period 2016-2018; Primary data was surveyed in 2019.
4. New contributions, scientific and practical significance of the topic
The topic has evaluated the current situation of agricultural production lending at Agribank Van Ban branch. From there, propose solutions to develop agricultural production lending at Agribank Van Ban branch, Lao Cai province.
The research results of the thesis will contribute to the transformation of agricultural economic structure and socio-economic development in Van Ban district in particular and Lao Cai province in general.
Chapter 1
SCIENTIFIC BASIS OF THE TOPIC
1.1. Concept and classification of credit
1.1.1. Credit concept
Credit is a relationship of mutual borrowing based on the principle of repayment; The term credit is used to refer to a number of very complex economic acts such as: selling goods on credit, lending, warranty, deposit, issuing banknotes. In each credit act, two parties commit to each other as follows:
+ One side immediately transfers some financial resources or currency.
+ The other party commits to repay the balances of the financial books within a certain period of time and under certain conditions.
French economist Louis Baudin defined credit as "an exchange of modern goods for a future good". Here the time element is involved and because of that involvement, there can be uncertainties and risks and there needs to be trust between the two parties. The two parties rely on trust and use each other's trust, which is why the term credit exists. Credit acts can be performed by anyone. For example, two people can often lend money to each other. However, today when talking about credit, people immediately refer to banks because these agencies specialize in lending, guaranteeing, discounting, depositing and issuing banknotes (Ho Dieu, 2003).
1.1.2. Content and nature of credit
Credit is very rich and diverse in form. The nature of credit is shown in the following aspects: first, the owner of a sum of money or goods transfers it to another person for use for a certain period of time. At this time, capital is transferred from the lender to the borrower. Second, after receiving credit capital, the borrower has the right to use it to satisfy one or several purposes.
Third, at the agreed upon time, the borrower repays the lender a value greater than the initial capital, the additional money is called interest (Ho Dieu, 2003).
Marx wrote about the nature of credit as follows: "Money only leaves the hands of the owner for a period of time and is only temporarily transferred from the right hand to the hands of the operating capitalist, so money does not have to be spent to pay, nor is it sold but lent, money is only transferred on one condition that it will return to the starting point after a certain period of time". At the same time, Marx also outlined the requirement of returning to the starting point: "Still retaining its value intact and at the same time growing in the process of movement". Up to now, economists have had many different definitions of credit, but they all reflect that one side is borrowing and the other side is lending, it is based on trust. Trust is expressed in the aspect: the lender believes that the borrower will use it for the right purpose, effectively and is a relationship with a term and repayment. This is the nature of credit (Ho Dieu, 2003).
1.1.3. Types of credit
- Commercial credit: is a credit relationship between businesses and is expressed in the form of buying and selling goods on credit. The seller transfers goods to the buyer, the buyer is allowed to use the goods for a certain period of time. At a certain time, the buyer must pay the seller, including interest. In this case, the buyer is not entitled to a sales discount. The legal basis for determining debt in a commercial credit relationship is the promissory note.
- Bank credit: is the credit relationship between banks, credit institutions and social entities.
- State credit: is the relationship between the state on one side and residents and socio-economic organizations on the other side.
- Informal credit: is a credit relationship between individuals that is not under legal relationship.
- Lease purchase credit: is a credit relationship between businesses leasing assets and lease purchase credit institutions such as lease purchase companies and financial companies (Ho Dieu, 2003).
1.2. Commercial banks' lending activities for agricultural production
1.2.1. Lending activities of commercial banks
1.2.1.1. Concept of lending activities in commercial banks
Banks are organizations that borrow to lend. It can be said that lending activities of commercial banks are the basic activities and create the largest source of income for commercial banks.
Lending activities of commercial banks are when commercial banks use mobilized capital to invest in state-owned enterprises, non-state-owned enterprises, agricultural production establishments and other organizations within a certain period of time to earn interest.
Currently, along with the development and competition trends, banks are researching and offering many credit products to meet the needs of customers, thereby diversifying their investment portfolios to attract customers, increase profits, disperse risks and stand firm in competition. For business households, banks provide many types of credit to meet the diverse needs of customers (Thai Van Dai, 2006).
1.2.1.2. Classification of lending activities of commercial banks
a. Based on credit term
Short-term credit: Is credit with a loan term of up to 1 year. With business loans, this source of capital is used to offset temporary working capital shortages. As for Household Business Credit, short-term credit serves the essential consumption needs of individuals and households.
b. Based on credit purpose:
Loan products for Household Business customers are often designed and developed based on traditional credit products but have some