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For Business Environment and State Policy Factors:


Credit scoring and approval of customer credit ratings, control of appraisal and approval or proposal for approval through credit limits of related corporate customers/customer groups, control of contents related to collateral, participate in credit councils, interest exemption and reduction councils, etc.

+ Disbursement control department: has the function and responsibility to control and approve or submit to competent authorities for approval transactions (loan disbursement, guarantee issuance, document discounting, etc.) based on the approved credit limit/credit amount for transactions exceeding the branch's credit control level, control and appraisal of guarantees, etc.

Strengthening bank inspection and supervision activities


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When considering whether to lend to a customer or not is an important step in the lending process, but after lending, whether the customer performs as committed or not is another matter, so credit monitoring after the loan has been disbursed is a mandatory task. It helps the bank determine the actual status of the loan, from which it can come up with appropriate solutions. However, the inspection and supervision work of Nam A Bank almost only exists in form or has not been focused on by the bank. Therefore, in the coming time, Nam A Bank needs to strengthen post-lending inspection and supervision activities. This activity needs to be carried out regularly, periodically and suddenly to promptly detect errors and warn of signs of violations, avoiding serious consequences and then handling them later, which will be very costly for the bank and put the bank in a passive position. In addition, strengthening customer inspection and supervision also limits customers' dishonest and deceptive intentions towards the bank. Post-loan inspection is not only carried out for problem loans but also for loans that are repaid on time. Inspection and supervision should be divided into: monitoring of each specific loan and monitoring of the entire credit portfolio. In which:


For Business Environment and State Policy Factors:

Regularly check and monitor each loan to detect early warning signs of possible deterioration of the credit as well as assess the customer's ability to repay so that the bank can take timely action and solutions. Checking and monitoring each loan is carried out on both financial and non-financial content. Regularly review and analyze financial statements to evaluate the activities of the borrowing customer. However, to have a clear picture of the customer's operations, analyzing financial statements is not enough, but it is necessary to regularly visit the customer's field, from which it is possible to determine the existence and actual status of the factory, machinery, equipment, collateral as well as the efficiency of the customer's use of loan capital.

Check and supervise the overall credit portfolio, analyze the credit portfolio periodically and regularly to detect credit concentration structure, and evaluate the quality of the credit portfolio through collecting and analyzing information about the environment, information about macroeconomic factors, fluctuations of industry groups to forecast potential risks and propose measures to prevent banks from adverse fluctuations in credit activities.

The inspection and supervision of customers must be made in writing with full signatures of the customer and the implementing officer. The document must specifically mention the existing problems and errors discovered during the inspection; request the inspected unit to take effective corrective measures and the time for correction. The bank needs to organize the review of the correction results to ensure that errors are promptly corrected and do not recur, and at the same time take strict measures to handle violations and negative acts to have a deterrent effect on similar cases. The inspection must ensure objectivity, honesty and clearly assign tasks and responsibilities to each inspection officer to improve the responsibility, awareness and quality of the post-loan customer inspection and supervision work.

Along with checking and monitoring customers, checking and controlling the behavior of credit officers and bank leaders is also an effective measure.


to minimize risks. Some current economic cases involving credit officers and bank leaders have the collusion of bank officers and customers to falsify loan documents, or to raise the value of mortgaged assets too high compared to reality to withdraw money from the bank, or the problem of ethical risks also occurs when bank leaders have beneficial relationships with customers. For these reasons, inspection and control are very necessary and help banks detect, prevent and correct errors in the process of performing credit operations. In addition, control activities also detect and prevent ethical risks caused by credit officers. To improve the quality of inspection and control activities, banks need to increase the number of highly specialized officers with experience in credit operations or appraisal for the control department; regularly train to improve the professional and legal qualifications of control department officers.

Improve the capacity of credit staff


The human factor is the most important factor that influences and influences credit activities as well as credit quality. Therefore, to limit risks and improve credit quality, banks need to improve the capacity of credit officers in terms of expertise, experience, professional ethics and sense of responsibility for work. Specifically:

Strengthening training and retraining of human resources to meet risk management requirements

High-quality human resources are the basis for determining the competitiveness of banks. Therefore, strengthening management and retraining human resources is an important, long-term measure for preventing and managing bad debts and the development of the entire banking system.

Every year, Nam A Bank needs to develop a training plan, retrain credit officers, and conduct regular and periodic training focusing primarily on key areas such as: credit risk management, accounting, auditing, credit analysis and appraisal activities. Credit activities involve many


fields, many industries, products, while credit officers at Nam A Bank have limited knowledge of business lines as well as lack of understanding of the market, the impact of macroeconomic factors, so the bank needs to have seminars to supplement knowledge for credit officers. In addition, the bank should invite experienced experts in the field of risk management from banks and financial institutions in the region and around the world to organize training courses and foster advanced knowledge in measuring, analyzing and controlling credit risks for officers and employees.

Recruiting high quality input personnel:


In recruitment, Nam A Bank needs to develop and promulgate strict, public and transparent recruitment regulations. Nam A Bank needs to select both young and experienced personnel to supplement the current weak and thin human resource force.

For young employees, banks need to select employees with knowledge of the market, knowledge of the banking and financial economy, good foreign language and IT skills, suitable for the bank among the large number of students majoring in economics graduating every year. For this source of human resources, banks need to have a plan to search and invest in creating resources while students are still in school through organizing annual potential internship programs, or becoming sponsors and guests of educational programs, exchanges or scientific seminars at universities; in addition, banks also need to have a reward system, granting valuable scholarships to good and excellent students with good moral qualities and especially creating preferential opportunities in recruitment to have a worthy job position. From there, banks can promote the brand and reputation of the bank to students and help the bank attract high-quality young human resources.

For experienced, highly qualified personnel and experts, Nam A Bank needs to have a satisfactory remuneration policy commensurate with their abilities.


their capabilities and build a professional working environment to attract highly qualified staff.

In addition, in order not to lose high-quality staff working for the bank, the bank needs to build a suitable remuneration regime for employees, promptly reward materially and spiritually for staff who complete their tasks well, and at the same time detect signs of moral decline to promptly correct them. Strictly handle staff who have negative behaviors, unintentionally or intentionally violate regulations leading to losses for the bank.

Pay more attention to risk forecasting: Establish a department specializing in risk forecasting, build an early risk warning system for bad debts. In order for bank loans to not be transferred to bad debt groups, it is necessary to set up an early risk warning system for customers who are classified as group 1 debt and are likely to be transferred to a higher debt group in the next 3 months. In addition, it is necessary to forecast risks in the market situation, so that lending activities are effective and safe.


3.2.1.2. Regarding business environment factors and State policies:

Stimulate aggregate demand, promote production and business activities:


The business environment has not shown signs of recovery, the weak aggregate demand of the economy makes production and business activities of enterprises difficult. Therefore, the urgent solution that the Government needs to implement is to stimulate aggregate demand. The Government should restructure the budget allocation towards increasing budget expenditure for infrastructure development to promote economic growth, while reducing expenditure in non-urgent areas, directing ministries and branches to disburse investment capital to invest in infrastructure construction to contribute to solving inventory. The Government needs to strengthen trade promotion, expand export markets, and have appropriate support solutions for export products and industries with advantages and competitiveness.


on the market today. The government needs to coordinate with localities to find out the causes and appropriate solutions for each region.

In addition, the State Bank needs to proactively coordinate with relevant ministries and branches to implement a number of other support solutions such as implementing appropriate credit programs, trying to set reasonable interest rates and maintain them, avoiding major fluctuations in the long term so that businesses can confidently plan their business and release inventories.

Strengthening the inspection and supervision of the State Bank


Strengthening the inspection, supervision and monitoring of banks to ensure that banks comply with regulations on banking activities, especially regulations on credit granting, regulations on ensuring safety of credit activities, debt classification, risk provisioning, and bad debt handling. Because banking operations are closely related, in the work of inspection, supervision and comprehensive monitoring of commercial bank operations, in which credit activities are the center, to identify the root causes of violations in credit activities of commercial banks, in order to promptly handle and minimize the damage caused by credit risks.

Currently, the State Bank's inspection and supervision function for credit activities at banks is not really effective. Inspection and supervision are still administrative, periodic inspections are local and usually only conducted when incidents occur without general directional warnings to limit risks for banks regarding the market, changes in policy mechanisms... or warnings for banks with excessively high outstanding loan growth rates, unbalanced credit structures, and high concentration in high-risk areas. Therefore, the State Bank needs to strengthen inspection and supervision of banks with excessively fast credit growth rates, review internal credit directives of banks to see if they exceed the State Bank's regulations. In the current difficult situation, to gain market share in credit,


In order to prevent unfair competition between banks, the State Bank needs to have a control mechanism and take measures to prevent unfair competition between banks. At the same time, the State Bank needs to give early warnings to banks during the inspection and supervision process.

Perfecting the legal system in bad debt management and coordination mechanism in handling bad debt of banks:

- The State Bank builds and applies modern international standards, especially complying with the basic principles of Basel (17 principles) in bad debt management, which is of great significance: creating conditions for commercial banks to increase their ability to mobilize capital, control inflation, promote economic development; increase the prestige of banks; the State Bank builds an effective inspection and supervision system to support the development of the financial market and build a strong, sustainable and developed banking system that meets the conditions of international integration.

- It is necessary to coordinate and support from functional agencies and local authorities at all levels in the process of handling bad debts of banks.

- Complete the legal system and policy mechanisms related to debt settlement activities to cover all situations that may arise in reality. For example: ownership rights, usage rights, transfer mechanisms, asset auctions, principles of asset valuation and auctions.

Currently, bad debt settlement is one of the important contents in the project to restructure the system of credit institutions. The State Bank regularly coordinates with relevant agencies and commercial banks to synchronously deploy solutions to handle bad debt. The State Bank and the government need to guide and deploy solutions to handle bad debt such as: selling bad debt with collateral to debt trading companies. Debt cancellation using risk reserves and handling collateral to recover debt; converting debt into capital contributions and shares of borrowing enterprises;

…

3.2.1.3. For factors from the borrowing customer side:


The orientation of Nam A Commercial Joint Stock Bank in the near future is to promote lending to small and medium enterprises, which is very potential for this type of enterprise.


dynamic, able to adapt quickly to market changes, the business apparatus is often compact. This customer helps the bank diversify its operations and spread risks. However, customer ethics issues such as absconding customers, lack of willingness to repay debts, data and document fraud, and issues regarding customers' management and business capacity are issues that banks must pay special attention to. To expand credit to this customer segment, banks must be proactive in identifying which customers are trustworthy, and must also analyze which customers have potential, or which customers have poor business performance leading to the risk of not being able to repay debts.

3.2.2. Bank's solution to bad debt:


Bad debt directly affects the bank's business results, bad debt can cause the bank to lose capital and interest, which will make it difficult for the bank to increase credit. Along with solutions to prevent bad debt in the future, the problem of handling bad debt of the bank is the main task at present. According to the author, Nam A Bank needs the following solutions:

- Review bad debts, consider the causes and assign material responsibility to individuals performing the tasks that cause bad debts that are difficult to recover. Related individuals must be responsible for clearing bad debts within their capacity.

- Accounting for bad debts in a transparent and accurate manner. Creating conditions for effective handling and recovery of bad debts. If bad debts are not accurately reflected or concealed, the problem of handling and recovering bad debts will be very difficult.

- Directly work with businesses and individuals who borrow capital and have bad debts to find appropriate solutions to recover bad debts from mortgaged assets and from loan interest reductions so that businesses can develop and thereby repay the principal to the bank.

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