Enhance the Application Capability, Synchronously Exploit Information Technology

Annually, Agribank must have a plan to re-screen its credit staff. If they do not meet the standards, they must resolutely transfer them to other jobs.

- Organize training on appraisal process, credit granting process, loan guarantee,... and credit mechanisms, debt classification issued in 2014 to 100% of credit officers to improve appraisal quality, inspection, supervision, loan risk management, and improve credit quality.

- Review credit officers from staff to leaders to have plans to rotate and replace suitable officers, provide training to improve professional qualifications for officers working in credit to improve the quality of appraisal, loan decisions, loan management and supervision.

- Issue financial regulations and rewards associated with targets for bad debt recovery, debt that has been cleared, and use of reserve funds for credit clearance, in order to encourage branches to make efforts to recover bad debt, debt that has been cleared, and debt sold to VAMC; apply strict disciplinary measures against relevant officers at branches with violations, high bad debt, and failure to complete assigned tasks.

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3.2.12. Other solutions

3.2.12.1. Enhance the ability to apply and exploit information technology synchronously

Although Agribank has implemented the application of information technology in banking operations quite thoroughly, it still cannot keep up with the requirements of modernizing banking technology. Many branches in the Agribank system have not been equipped with machinery and equipment in a timely manner to ensure synchronization. On the other hand, it must be seen that, due to the lack of necessary systematicity and synchronization, it has been significantly affected by the reality of rapidly changing technology and limited budget, which has led to difficulties in creating compatibility and synchronization between new technology and old equipment, which has significantly affected banking operations.

Implementing synchronization will create a diverse and comprehensive integrated chain that allows the gradual replacement of dependent devices in any part of the system when needed according to the development chain, so there will be no financial pressure, no loss of system and ensure optimal use of new technology systems in synthesizing, storing, analyzing, evaluating information and especially sharing information in banking activities, customer information, market information, etc. Unifying the application of information technology will create

Therefore, the coordination between branches to collect and exploit customer information, exploit information from the CIV system, ... to serve risk prevention in banking activities, especially RRTD prevention. To do so, Agribank needs to develop an information technology system development plan in the following direction:

- Quickly and effectively deploy information technology projects, modernize banks, improve management and administration efficiency; have a reasonable mechanism for deploying technology projects, ensuring timeliness, avoiding falling behind in line with the rapid development of current technology;

- Strengthen system security and safety, strictly manage the issuance of USER and PASSWORD; strictly handle violations, create a habit of careful and meticulous work; continue to deploy the construction of a backup data center at a new location;

- Build and deploy modern technology systems according to international standards and set technology goals (centralizing national data, online transactions, nationwide communication network system with high safety and security, etc.);

- Unify the entire system on software programs and technological processes;

- Fully equip machinery and IT equipment for staff, especially in remote branches.

Implementing this solution will help the banking system in general and Agribank in particular to improve the ability to modernize banking operations, including optimizing agricultural economic credit.

3.2.12.2. Improve the quality of statistical reporting

Agribank must establish and arrange competent and qualified staff for the Economic Forecasting and Statistics Reporting Department. Improve the quality of statistical reports to help the Board of Members and the Executive Board correctly assess the current situation of banking activities in general and credit activities in particular, on that basis, set appropriate target orientations;

Do a good job of forecasting and providing domestic socio-economic information as well as issues related to the global economy to the Board of Members, Executive Board and branches.

3.2.12.3. Exploiting and maximizing the business capacity of the Bank for Agriculture and Rural Development of Vietnam

Through Agribank Insurance Company (ABIC), Agribank directs the pilot implementation of borrower life insurance (credit security), loan collateral insurance for farming households, organizes a preliminary review and evaluation of activities in 2013, on that basis, widely deploys nationwide; recommends to the State Bank and the Ministry of Finance the plan: Borrowers pay at least 50% of the annual insurance premium, the remaining amount is supported by the State or the Ministry of Finance implements reinsurance;

Expand financial leasing activities (leasing machinery and equipment for agriculture; leasing means of transport, etc.) for farmers and rural areas;

Exploit the advantages and networks of affiliated companies to develop services, develop potential credit customers; carry out gold loans, loans to buy bonds, shares,...

3.2.12.4. Providing non-credit products

Agribank must continue to improve and enhance the quality and efficiency of its information technology system, promote the issuance of ATM cards, international Visa cards, domestic debit cards, master cards, develop modern banking products and services, increase the market share of banking services in urban areas, and quickly deploy banking products and services to serve rural areas. In densely populated areas, towns and townships, Agribank has well organized the payment of electricity and water bills through bank accounts, linked labor export loans with remittance services, etc.

Agribank needs to focus on directing and effectively organizing international payment activities and cross-border payment at branches in urban areas, the Mekong Delta, the Central Highlands, the Northern Border, industrial zones... linking credit investment with foreign exchange activities.

Identifying the development of utility services as a long-term strategic orientation; utility services must be gradually improved, especially in urban areas. Agribank needs to promote its network advantages to strongly develop card services, money transfer services, safe deposit boxes, agricultural credit insurance, etc., gradually forming Agribank's typical products.

3.2.12.5. Promote the brand and implement corporate culture in dealing with customers

Develop a brand development strategy for Agribank for the period up to 2015 and the next 5 years, up to 2020. Specifically:

- Each provincial and municipal branch has a propaganda and marketing orientation that is close to the local reality; in each period, there should be flexible and appropriate solutions to effectively implement information, propaganda and marketing work to promote Agribank's brand domestically and internationally, diversifying forms of propaganda, disseminating mechanisms and policies related to the industry, loan procedures, etc. so that customers understand and implement them correctly.

- Build and organize good implementation of corporate culture in communication, behavior, work resolution and other activities; use synchronously and consistently all types of documents, records and procedures.

- Closely and effectively cooperate with APRACA, CICA and agricultural banks of other countries through seminars, conferences, and study tours to learn and exchange experiences.

3.2.12.6. Perfecting the organizational structure

Agribank must restructure the organization, improve the working apparatus scientifically from the Head Office to the branch network; conduct an assessment of the operational capacity of the branches to merge or separate branches to suit the operational capacity of each branch.

In order to be able to deploy and apply modern lending methods and processes, risk management processes as well as modern banking management methods, Agribank is required to restructure its departments and professional divisions; clearly assign and divide tasks to each department and area to both shorten work processing time and effectively manage risk prevention work.

3.2.12.7. Operational innovation

Agribank must actively develop a plan to implement Decision 53/QD-NHNN of the Governor of the State Bank of Vietnam on Approving the Agribank Restructuring Project for the period 2013-2015; the development of goals, credit investment plans, bad debt handling, and recovery in 2014 must closely follow the Agribank Restructuring Project, implement Circular 02 from June 1, 2014, closely follow capital needs according to customer groups and each industry,

economic sector programs, especially agriculture and rural development, export production, supporting industry, processing industry, small and medium enterprises, high-tech enterprises, labor-intensive enterprises, production households,...

The credit plan management must be flexible between quarterly and annual plans, suitable for the seasonality in agriculture and the liquidity situation of Agribank, regularly monitor the implementation of the credit plan, to promptly handle arising problems, adjust the capital transfer fee mechanism in accordance with the lending interest rates for programs and credit packages in priority areas, apply preferential interest rates to encourage branches to expand credit growth in the fields of agriculture, rural areas, export, balance foreign currency capital to meet foreign currency lending needs for subjects according to the regulations of the State Bank, submit to the State Bank for timely approval of foreign currency lending needs beyond the prescribed authority; improve the working style of units at the Head Office, promptly handle issues beyond the authority of the branch to create favorable conditions for the branch in credit management, improve the spirit and responsibility in appraisal work, shorten the time for re-appraisal and approval of loans beyond the authority of judgment.

3.3. Recommendations

3.3.1. For the State

3.3.1.1. Accelerating the progress of perfecting the legal environment for banking business activities

Up to now, after the Law on the State Bank and the Law on Credit Institutions 2010 came into effect, as well as a number of related laws issued before, a series of documents have been issued by the Government, creating a legal environment for the operations of commercial banks. However, there are still many shortcomings, especially in credit activities. To overcome this situation, the State needs to issue additional and amend a number of the following contents:

First, regulations on loan guarantees:

The Government and relevant Ministries and Branches shall study and complete the legal framework on loan guarantees, creating conditions for credit institutions to have sufficient basis when granting credit. Specifically:

- The Government directs the People's Committees of provinces and cities to urgently complete the planning to grant certificates of land use rights for residential land and agricultural land to people, especially in rural areas and towns in districts and wards to clear some areas.

Problems in lending mortgages using land use rights such as: According to regulations on property mortgage, borrowers must hand over to the bank the original land use right certificate, but in reality, in the provinces, only 42% of the total number of certificates that must be issued are issued.

- Urgently issue new or amend and supplement guiding documents to have a synchronous mechanism for implementing the Law on State Bank and the Law on Credit Institutions; amend and supplement the Land Law in the direction of allowing free exchange and transfer on the market.

- The Government needs to issue documents clearly defining the functions and tasks of state management agencies responsible for confirming ownership of houses, real estate and other assets; managing the activities of buying, selling, mortgaging and pledging assets; and handling wrongdoings and violations of the law.

- The Government needs to specify the handling, auction of collateral, mortgages, and guarantees as a basis for implementation; simplify unnecessary administrative and legal procedures in the handling process to ensure quick implementation.

Second, strengthen State management measures for enterprises:

- Strictly control the granting of business establishment and registration licenses to enterprises in accordance with the actual capacity of that enterprise. Through practical research on commercial bank credit activities in recent years, it has been shown that a major difficulty and obstacle to commercial bank lending activities is the mismatch between the actual capacity and qualifications of enterprises and the functions and scope of business permitted by the State. Many state-owned and non-state-owned enterprises are granted establishment licenses and business registration by the State with functions and tasks beyond their financial capacity, technical level and production and business level. We can mention the limited liability companies and joint stock companies that are being established more and more nowadays. Even state-owned enterprises, capital is often very small, fixed assets are mainly outdated machinery and equipment. Meanwhile, the functions and tasks in the business license are numerous, even all other business lines that are not prohibited by law. Article

That will reduce the performance of these businesses.

Therefore, the problem for the Government and relevant agencies is to adjust mechanisms and policies based on research on real-life problems.

The objective is to help commercial banks have feasible solutions in credit management, meeting the requirements of enhancing economic development and ensuring the quality, efficiency and safety of loans.

- It is necessary to uniformly stipulate that only one state agency has the authority to issue establishment licenses and business registration certificates to enterprises. The licensing agency must be responsible for the legal status, actual equity, capacity and qualifications of the enterprise.

- The number of business lines and scale of operations must be consistent with the capital owned and the actual management capacity and level of the enterprise.

- Issue regulations requiring businesses to comply with accounting and statistical laws and mandatory auditing regimes.

Full and timely information is an important basis for commercial banks to make the right decisions in granting credit to preserve loan capital for the bank. However, in the current situation, a huge obstacle for commercial banks when collecting information about customers to make a right decision on loans is the situation where businesses do not accurately reflect the actual state of their production and business activities as well as the actual state of their financial situation. This is one of the main causes of overdue debt and RRTD today.

The current widespread non-compliance with the statistical reporting regime is partly due to the fact that the law on statistical accounting is not yet effective enough to require enterprises to comply, and partly due to the fact that the conditions for statistical accounting in our country have not yet developed control activities and have not yet implemented a mandatory auditing regime. On the other hand, the measures to handle economic and administrative violations are not strict. Therefore, the State needs to immediately take strong measures to force enterprises to comply with the law on statistical accounting and implement a mandatory annual auditing regime for all enterprises.

3.3.1.2. Creating a stable economic environment contributes to ensuring the effectiveness of credit capital that commercial banks provide to the economy.

Operating in a stable economic environment will help businesses operate with peace of mind, improve the efficiency of using bank loans, and create the ability to fully repay bank loans. On the contrary, an unstable economic environment will hinder their business operations, resulting in business losses and making it difficult for businesses to repay bank loans.

The State's macro management policies and mechanisms are in the process of adjustment, innovation and improvement. Domestic production and business must compete fiercely with imported goods and smuggled goods. Enterprises change direction and adjust their production and business plans but cannot keep up with the changes in the State's macro policies and mechanisms. Therefore, a number of enterprises and production and business sectors encounter difficulties, with stagnant inventories of goods and materials, losses, inability to pay, resulting in overdue and bad debts (just counting the tax rate schedule for imported goods that changes several times each year, it has caused many enterprises to encounter difficulties). Therefore, the State needs to take measures to ensure a stable economic environment for business operations, including both business operations and commercial banks. The State should have stepping stones or practical solutions to remove difficulties caused by the transformation and adjustment of mechanisms and policies related to the entire economic activities.

On the other hand, the State needs to have policies and measures to protect the production and business activities of domestic enterprises, and needs to adjust and strengthen the legal effectiveness of tax policies, policies to protect domestic production, policies to prevent smuggled goods, etc. to ensure the positive nature of these policies.

The State allows the establishment of organizations to provide information that ensures timely accuracy to credit institutions.

3.3.1.3. Developing the agricultural insurance market, contributing to reducing risks in lending to agriculture, rural areas and farmers of commercial banks in general, including the Bank for Agriculture and Rural Development of Vietnam.

- The government plays an important role in developing the insurance market, but it can only allocate limited resources to agricultural insurance. The government should focus on building a legal framework for insurance market development, strengthening information and data systems, capacity building and training, and supporting product development.

Research and develop agricultural insurance products associated with loans and develop distribution channels through the network of the Agribank system. In which, the first premise is to promote the development of ABIC's Insurance sector. Specifically:

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