Expanding Fundraising Network and Improving Service Quality

In addition, in the current economic conditions of increasing development, society is increasingly civilized, income and accumulation of enterprises and residents are increasing, in order to mobilize many sources of capital for investment in socio-economic development, commercial banks need to diversify other forms of mobilization such as: Automatic investment accounts, term deposits with interest rates increasing over time, term savings deposits with flexible principal withdrawal, school savings

. . . and at the same time, promote to customers to mobilize capital through banking utility services based on advanced and modern technology such as credit cards, ATM cards, POS, Mobile Banking services, Internet Banking services, automatic collection payment services, collection on behalf of the State Budget, bill payment, salary payment via account...

4.3.2. Expanding capital mobilization network and improving service quality

- Regarding capital mobilization network : Up to now, commercial banks in Ho Chi Minh City have had a relatively good capital mobilization network throughout the city. However, in general, the capital mobilization network of commercial banks in Ho Chi Minh City is not suitable and convenient for depositors: There are areas with too many transaction offices and transaction points, especially in District 1; there are areas that are almost empty, especially in remote communes. Therefore, it is necessary to have a full understanding of the role and responsibility of transaction points receiving savings deposits, and to identify favorable locations to expand the network of transaction points; both to meet the deposit needs of the people and to mobilize local capital for investment and business development.

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- Regarding service quality improvement: Along with expanding the capital mobilization network, improving the service quality in capital mobilization is also very important. Mobilization is not highly effective if the mobilization network is favorable but the service quality is not good and vice versa. Service quality has many contents, which are improving technological processes, diversifying products, especially new and advanced products; products that can solve many different needs and benefits and most importantly, high liquidity. Besides, equally important content is the attitude and working style of employees at transaction points receiving savings deposits combined with their professional qualifications to create trust in the public or not

Public confidence in banks is a factor that has a great impact on the amount of people's deposits in commercial banks.

- Implement customer policies well : On each customer's birthday, there should be a birthday greeting card. In addition, for large customers, traditional customers and potential customers, in addition to flowers and cards, there should be a meaningful gift to give to customers. For customers who are legal entities, it is necessary to regularly organize cultural and sports exchanges. Through these exchanges, the two sides need to exchange thoughts and wishes, or talk about difficulties and problems in the transaction process, thereby the parties will understand each other better, thereby banks will consolidate and perfect their policies to suit each customer group.

- Regarding the promotion and expansion of capital mobilization activities: Reality shows that the attention to improving and enhancing the quality of customer service, combined with the forms of propaganda and widespread advertising of banking services, has a very positive impact, helping commercial banks attract idle capital from the people.

Forms of promoting capital mobilization activities include:

+ Advertise and widely inform about the benefits and conveniences of savings forms so that everyone can know and choose: prepaid interest savings, floating interest savings, flexible principal withdrawal savings, school savings, anonymous bonds, transferable promissory notes, etc.

+ Widely, popularly and regularly apply gift forms with printed logos introducing the image of commercial banks, reward forms through lottery, savings books, travel, sightseeing...

+ Organize advertising campaigns for each issuance period of various types of bills and bonds to mobilize the necessary amount of capital according to the specific needs of customers and projects.

4.3.3 Credit solutions of commercial banks in Ho Chi Minh City contribute to promoting economic restructuring

4.3.3.1. Continue to innovate awareness of credit investment

The Bank has achieved many great results, and at the same time, there have been lessons learned that have been paid for, even very expensively. It is also a process of innovating the banking operational mindset, and the focus is on innovating the credit mindset. That process requires continuing to innovate more strongly the mindset of investment lending: from being passive, confused, waiting for projects, plans, and customers to consider investment lending. It is a process of implementing the supply and demand relationship of credit, investing for whom? How much to invest? and how to invest? This is confirmed by the following aspects:

- Since the transformation into a two-tier bank, commercial banks have been established and conducted monetary business according to the market mechanism, with equal economic relations, gradually eliminating the concept of "request-grant". Therefore, the relationship between commercial banks and borrowers is a partnership relationship that affects each other in the transaction process. On the other hand, the market economy develops, competition is increasingly fierce, so are commercial banks, so proactively searching for customers, projects, and lending options is inevitable to ensure the success of each commercial bank.

- By being proactive, the Bank not only searches for projects, plans, and customers, but also actively participates in the appraisal process to select customers and projects with feasibility for investment and lending. Choosing good customers and projects determines credit quality and lending efficiency.

- By proactively approaching customers, commercial banks understand the capital needs of customers and projects (credit market needs) to prepare credit products with appropriate volume and reasonable prices to meet effective capital investment.

4.3.3.2 It is necessary to improve loan procedures in the direction of streamlining and simplifying.

One of the reasons why customers are reluctant to access bank credit capital is that the loan procedures of banks are still too cumbersome and complicated, so it is necessary to reduce or combine some overlapping and duplicate loan procedures while still ensuring the legality and safety of loans, thereby creating more favorable conditions for customers.

customers; if so, customers will feel more comfortable when applying for loans at commercial banks. In addition, commercial banks need to improve their lending processes and procedures so that customers can access loans quickly and conveniently. Therefore, commercial banks should reduce some of the following lending processes and procedures:

- Propose to remove the confirmation "Mr./Ms.:... is currently residing in the district" of the ward or commune on the loan application form. This confirmation makes customers waste a lot of time traveling, increases transaction costs, and sometimes the confirmation time is quite long, causing customers to lose business opportunities; this confirmation is really unnecessary because in the customer's legal documents there is already a photocopy of the household registration book or temporary residence registration book and ID card, so the bank requires customers to confirm that they are currently residing in the locality is redundant and not really necessary.

- The cost objects should not be listed on the loan application, because the customer's project and business production plan have fully recorded the cost objects to calculate the effectiveness of the project and business production plan.

- The list of founding members should be removed (loan application for joint stock companies, limited liability companies, joint stock companies, partnerships), because the company charter and business registration certificate clearly state the list of founding members of the company.

4.3.3.3 Increase medium and long-term capital investment, expand the form of hire-purchase credit, ensure a synchronous and reasonable investment structure to serve economic restructuring.

- Regarding medium and long-term credit:

One of the reasons leading to the limitation in the process of economic restructuring and attracting investment to Ho Chi Minh City is: The infrastructure system is still weak and lacking, equipment and machinery serving production and processing are not modern, still backward and rudimentary.

In recent years, the outstanding balance of medium and long-term credit has tended to increase in absolute numbers and decrease slightly in proportion, but the credit volume is still low, not meeting the very urgent demand for long-term capital for CD CCKT of Ho Chi Minh City. Moreover, the role of medium and long-term credit is even greater when our country's stock market (long-term capital market) is not yet developed, leading to very slow transactions for CD CCKT.

To rapidly develop the scale of medium and long-term credit, Ho Chi Minh City needs to increase appropriate funding methods such as lending methods according to investment projects, installment lending methods, lending methods according to reserve credit limits, syndicated lending methods, lending methods for housing needs, lending methods for workers working abroad for a limited period of time...

In addition to expanding short-term lending, special attention should be paid to increasing the proportion of medium- and long-term outstanding debt by:

+ Mobilize domestic and foreign medium and long-term capital sources to focus on lending according to programs, projects and economic development orientations of Ho Chi Minh City, in order to create a foundation for developing commodity production, improving the production and business capacity of enterprises and production households, and creating conditions for effective credit expansion.

+ Prioritize foreign aid capital sources from international organizations with medium and long-term periods for economic development programs of Ho Chi Minh City, contributing to accelerating the process of economic restructuring.

- Expanding the form of hire purchase credit:

The expanded leasing credit will help businesses reduce bank debt to invest in fixed assets, reducing financial pressure on businesses. On the other hand, leasing credit creates opportunities for businesses to choose the generation of technology equipment according to their needs, limiting losses due to lack of knowledge and buying the wrong machinery and equipment because they have received in-depth professional advice from the lessor.

This form is very suitable for Ho Chi Minh City today because it does not require equity participation. The mortgaged property can be received from 50% or more compared to the value of the leased property and has a longer term than if borrowing capital from the Bank by other methods may not be accepted. In case there is no mortgaged property, the lessee can sign a minimum amount to be leased. The application of the lease-purchase credit method will create favorable conditions for businesses and individuals in Ho Chi Minh City to carry out technical improvement projects, purchase machinery and equipment, innovate technology, accelerate the economic restructuring according to the direction of Ho Chi Minh City, especially small and medium enterprises developing in Ho Chi Minh City.

4.3.3.4 Loan security solutions

- Expanding loan security forms: Currently, commercial banks in Ho Chi Minh City only accept land and factories owned by customers as collateral, other assets are not yet accepted even though other assets are permitted by law to be pledged or mortgaged; therefore, commercial banks should expand other forms of loan security for lending such as: Mortgaged assets, pledging assets such as means of transport, machinery and equipment lines, assets attached to leased land, pledging warehouses, mortgaging factories, technology, software, mortgaging land ownership rights of perennial trees... at the same time, expanding mortgage lending, pledging assets formed from loan capital (assets formed in the future).

- Regarding valuation of mortgaged assets: It is necessary to value mortgaged assets and pledges closely following market prices. In fact, commercial banks in Ho Chi Minh City all value lending assets lower than their actual value, while banks mainly rely on the value of collateral assets to lend, which leads to customers being able to borrow low amounts of money that are not enough to carry out projects and business plans. Regarding the issue of determining the value of collateral assets, commercial banks should determine the value of assets according to the actual market price of transfers in the locality. Commercial banks should hire an independent valuation agency to assess for reference in determining the loan amount.

4.3.3.5 Flexible use of interest rate tools

Currently, commercial banks in Ho Chi Minh City operate interest rates according to the agreement mechanism with customers; Loan interest rates are determined based on the principle of ensuring cost compensation, risk provision, implementation of budget obligations, and profit (however, it also depends on the supply and demand factors of capital in the monetary market).

The lending interest rates currently applied by commercial banks include two main methods: Fixed interest rates (do not change over time) and floating interest rates (change over time and market signals).

Commercial banks should apply the floating lending interest rate method, because this is a method that can limit interest rate risks for both the lending bank and the borrower. According to this method, the lending interest rate is fixed at the time of disbursement and determined periodically according to a certain period of time from the disbursement date or according to market signals, the loan interest rate will be re-determined.

In addition, commercial banks in Ho Chi Minh City need to use lending interest rate tools more flexibly within the scope of authorization and permission of central commercial banks to contribute to the economic restructuring of Ho Chi Minh City, specifically:

- Apply preferential loan interest rates for export (called export financing interest rates) to support businesses to increase the export of goods (based on calculating income from international payment services, from buying and selling foreign currencies brought about by the loan scheme, commercial banks can apply export loan interest rates lower than normal loan interest rates).

- Apply stable and preferential lending interest rates to key projects, industries, and dynamic economic zones of Ho Chi Minh City on the basis of reducing banking costs such as risk provision costs (projects ensure efficiency and feasibility), banking operations costs, and banking profit margins (due to large loans, income is large despite low profit margins).

- Apply preferential loan interest rates for poor households, poor but excellent students, and policy beneficiaries based on entrusted capital and self-mobilized capital at low "prices".

4.3.3.6 Expanding lending investment associated with improving credit quality

Expanding and increasing lending investment to promote the economic restructuring is an urgent requirement and demand of the economy for commercial banks. However, the most concerning issue of commercial banks in Ho Chi Minh City is quality. Low credit quality is not only difficult for banks but also an obstacle to the expansion and growth of lending investment of commercial banks.

Improving the quality of credit growth depends on many factors, including factors belonging to the Bank as the lender; factors belonging to the customer as the borrower; objective factors; macro-management factors, related to policies; and micro-level factors related to the administration and management of commercial banks and borrowers.

To achieve the goal of safe and effective development to improve credit quality for commercial banks in Ho Chi Minh City, the following solutions need to be implemented:

- Diversify credit products associated with appropriate lending methods: Currently, the credit scale of commercial banks is still limited due to the small number of credit products and the existing lending methods have high risks. Therefore, it is necessary to diversify credit products with appropriate funding objects and methods such as: syndicated loans, private economic loans, loans to SMEs, consumer loans... are large credit objects, lending banks will be able to disperse risks.

- Strengthening the management of secured loans: According to the regulations of the Government and the State Bank, commercial banks are entitled to provide secured or unsecured loans according to necessary criteria, regardless of economic sectors. However, in reality, commercial banks have long been providing unsecured loans mainly to state-owned enterprises, while most non-state enterprises have been providing loans with mortgages or third-party guarantees. This creates unfairness in accessing credit capital for enterprises that have not mobilized and have not exploited the strength of the non-state economic sector.

4.4 RECOMMENDATIONS AND SUGGESTIONS

4.4.1. For the People's Committee of Ho Chi Minh City and departments and branches

- Review and supplement the overall socio-economic development plan of Ho Chi Minh City and detailed plans for each region, sub-region, and industry... to create orientation for business activities of economic sectors in Ho Chi Minh City and serve as a basis for commercial banks to plan to expand credit investment.

- The Ho Chi Minh City People's Committee directed relevant levels and sectors to speed up the issuance of land use rights and house ownership certificates to create conditions for households to borrow bank loans to develop production and business.

- The Ho Chi Minh City People's Committee directed departments and branches to speed up the process of granting business certificates for industries that can easily access bank loans more and more.

- Strengthen trade promotion, seek domestic and export markets, create stable output markets for products of the service and industrial sectors...

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