Organizing professional exams to promote and raise salaries for staff. Through that, it creates motivation for employees to work enthusiastically, constantly improve their professional skills to complete assigned tasks well.
In providing credit services in general, as well as CNDN credit in particular, employees who directly communicate with customers need to demonstrate a professional working style, have a solid grasp of professional knowledge, always be attentive and enthusiastic with customers, listen to their wishes and aspirations, share with customers, guide customers to complete procedures and satisfactorily explain customers' concerns.
Develop appropriate interest rate policy
Commercial banks need to regularly update the industry and market situation to adjust interest rate policies to achieve the goal of balancing between maximizing profits and minimizing risks, ensuring safe and effective credit growth, gradually in line with international practices and standards. Lending interest rate policies need to be flexible, lending interest rates are not the same for different loans depending on the term, currency, loan project and specific borrower.
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Outstanding Credit for Long-Term Industrial Crops by Bank
Reduce operating costs
Among the credit operating expenses, administrative expenses and depreciation expenses are on the rise. To improve efficiency, these expenses need to be considered for reduction. In particular, in 2014, administrative expenses accounted for 28% of total expenses, compared to 21% in 2012. To reduce administrative expenses, banks need to establish cost norms for each activity and allocate them to each department, while promoting the spirit of thrift and fighting waste in all activities.
One of the major limitations of the credit process is that the monitoring and control of capital use after disbursement is not strict, so it is necessary to strengthen monitoring and control after disbursement.
Post-disbursement control is a really important job to evaluate the customer's compliance with the credit contract commitments, update
information on financial status to detect warning signs of credit risk. Banks can monitor by measures such as: Monitoring customer account activities at the bank through fluctuations in balances of payment deposit accounts and current accounts to have comments on product consumption and financial management of customers. Periodically analyzing financial reports to promptly detect notable changes in customers' ability to repay debts. Visiting and controlling the customer's business location or residence, this will provide information on the purpose of capital use, production and business status, inventory status, asset quality, etc. Regularly checking mortgaged assets to ensure that the assets are used in accordance with the contract, the condition of the assets is still guaranteed or the market value of the assets is not seriously reduced. If any risks related to the collateral are detected, the bank needs to promptly adjust the terms of the contract to suit the new conditions.
Actively apply modern credit risk management models, using internal credit rating systems. The internal credit rating system will help evaluate and score customers' potential debt default and, based on the scores, classify customers into appropriate risk categories, thereby clearly and concisely reflecting customers' debt repayment ability and forecasting future results. Credit officers can rely on these results to make credit granting decisions or request changes and additions to terms in the credit contract if necessary.
Actively handle bad debt
Commercial banks must reassess the quality of assets to assess the ability to recover and the value of debt in detail. Then bad debts can be handled in many ways such as: actively urging debt collection, liquidating secured assets, selling debts to debt trading companies, using risk reserve funds to write off debts, etc.
Rearrange the network of branches and transaction offices appropriately
One of the main competitive advantages of State-owned commercial banks is their extensive distribution channel system, however, not all branches and transaction offices operate effectively. Transaction points located in inappropriate locations will not be able to fully exploit their operational capabilities, leading to profits not being enough to cover costs, negatively affecting the bank's operational efficiency. Therefore, it is necessary to study people's needs and the ability of competitors in the industry to respond to them in order to decide to expand or reduce the distribution channel network to bring about the highest operational efficiency.
Modernization of technology
State-owned commercial banks have a huge advantage in capital, so they can invest in the most modern equipment to increase competitiveness, attract customers, reduce operating costs and improve operational efficiency. However, banks also need to pay attention to the ability of bank employees and customers to access new technology, avoiding the case where new technology is not used to its full capacity, causing waste.
3.2.3 Group of solutions to improve customers' capital efficiency.
To improve the efficiency of using credit capital for CNDN plants, it is necessary to implement many synchronous measures, including:
Strictly follow the techniques of planting and caring for trees: Ensure factors of varieties, plant density, fertilizer, irrigation, weeding, pruning, root-raising, and pest control. There must be a plan to liquidate and replant poor quality, old, and ineffective gardens. Avoid harvesting products completely, which will affect the health and quality of the trees later. Maximize the efficiency of land area by increasing intercropping of short-term industrial crops between CNDN gardens.
For cashew trees: Develop a suitable intensive cultivation plan at the highest level, perform canopy shaping, pruning, grafting, fertilizing, and pest control according to technical procedures. For old cashew gardens, low-yield varieties, and severe pests, it is necessary to cut down and replant with new cashew varieties, using a simultaneous or rolling method suitable to the capacity of each household. For cashew gardens
Mixed varieties, uneven growth, many dead trees need to be classified, bad trees, poor growth, low yield trees need to be cut down; new seedlings need to be replanted. Apply the correct technical process for replanting, replanting, ensure density, spacing, planting hole size, apply enough quantity and quality of fertilizer before planting, use seedlings of clear origin, correct variety, ensure standards.
For pepper plants: Pepper plants are very sensitive to diseases, so the planting and care regime must be different from other crops. In particular, the selection of pepper varieties must be suitable for the soil, because pepper is a vine, breeding is faster and easier than other plants, on the outside the pepper plant grows well but it itself can contain harmful pathogens, so if the selection is not careful, the quality of the variety will not be guaranteed, causing the emergence and spread of diseases.
For rubber trees: Should be planted in hilly areas, wind-sheltered areas. Choose varieties of asexual lines recommended by the Vietnam Rubber Research Institute: RRIM 600; RRIM 712; RRIC100; RRIC121... are wind-resistant varieties, and have high yields, are less susceptible to powdery mildew and striped canker. Regarding density, for flat land, it is recommended to design a surplus of about 10-15 hectares and a plot of about 3-5 hectares. Tap the right age of the tree and the allowed perimeter, do not tap early, apply a reasonable tapping regime and use latex stimulants, after the garden has been in business for 3-4 years, use stimulants and the number of times used should not exceed 3-5 times/year, depending on the age of the tree. Should mainly use organic fertilizers, limit the use of inorganic fertilizers.
Avoid over-weeding the rows. Hilly and sloping areas should be planted with anti-erosion grasses such as KUDU grass and wild peanuts.
For coffee trees: Currently, TR4 coffee variety is the best because it grows well, can yield over 7 tons/ha and is resistant to some pests and diseases. Next are TR6, TR8 and TR5 coffee varieties, with good care will yield 4-6 tons/ha. The land for growing coffee must be cleared and drainage ditches dug. Coffee is a tree with high nutritional needs, so each year, 10-15 kg of composted manure/tree must be added and fertilized after harvest. If a water-saving irrigation system is installed and
Fertilizing through pipes, the amount of chemical fertilizer for each batch should be divided into 10 days of watering. In Binh Duong, gardeners often apply the method of growing multiple trunks, meaning that each tree retains three trunks distributed evenly around it. This method has the disadvantage of a short fruiting cycle of only 5-7 years. To overcome the above disadvantages, farmers can grow additional branches to replace the main trunks with umbrella canopy. The method is to select healthy shoots at the base, and after harvesting, saw off the trunk with umbrella canopy and care for the young shoots to develop. In addition, if you want your coffee garden to grow well and have few pests and diseases, farmers often prune out the shoots, branches with pests and diseases, or branches that bore fruit in previous years with only 2-3 pairs of leaves at the top of the branch. For old coffee gardens with low productivity, farmers cut down to restore at the end of the fruit harvest season. The sawing position is about 20-30cm from the base and each tree retains three best shoots distributed evenly around the base. Then, care for and fertilize the plant according to the recovery regimen.
3.2.4 Group of solutions to improve access to credit capital
Firstly, the government needs to continue to speed up the process of granting land use rights and house ownership certificates to agricultural households. Currently, about 15% of agricultural households have not been granted land use rights and house ownership certificates. Granting land use rights and house ownership certificates will contribute to increasing the assets that can be mortgaged at banks, thereby improving access to credit for agricultural households.
Second, continue to implement mechanisms and policies to facilitate and encourage children of agricultural households to go to school. This will have a positive long-term impact on increasing the labor capacity of agricultural households, thereby increasing access to capital. Policies to encourage education can include financial policies such as: preferential interest rate credit programs for the purpose of promoting education, establishing scholarship funds for children of poor households with good academic results, etc., non-financial policies such as: establishing special bus routes to transport children from remote areas to school, ensuring that the majority of agricultural children can access schools conveniently.
Third, local commercial banks need to develop and organize a number of training programs, selectively providing free consultation to agricultural households on the following skills: Making production plans; managing agricultural production; managing cash flow; accounting for financial income and expenditure in agricultural production. This, on the one hand, helps agricultural households manage their resources more effectively. On the other hand, it creates conditions to enhance two-way information exchange between banks and agricultural households, thereby providing a useful information channel to help banks have a better basis for customer appraisal, reduce dependence on information sources from CIC as well as reduce dependence on collateral factors, contributing to further improving the ability of agricultural households to access credit capital.
Fourthly, it is necessary to raise awareness of agricultural households about the credit capital provided. Through public relations and joint promotion, commercial banks need to increase their image and brand among the people; create all conditions to raise awareness and understanding of the people about the role of bank credit capital in consumption and production. Through production groups, cooperatives, and agricultural alliances, commercial banks can hire technical experts and organize seminars on the topic of improving the efficiency of growing CNDN crops and credit for CNDN crops; thereby taking advantage of introducing credit products and guiding farmers on how to access bank credit capital. To create close relationships, banks can build a program to award valuable rewards to agricultural households growing CNDN crops with high productivity, and award scholarships to agricultural children with good academic performance.
3.2.5. Group of risk management solutions in credit expansion.
A credit risk management framework needs to be developed. A good credit risk management system must be placed in an appropriate risk environment. A risk strategy that clearly defines the general risk tolerance level, and the credit risk tolerance level in particular, is the guiding principle for the operation of the credit risk management system. The Bank's credit risk strategy must be built on a comprehensive and thorough assessment of the bank's business situation and the
macroeconomic situation. The Board of Directors is the body ultimately responsible for approving the credit risk strategy .
Figure 3.1. Main risk management components
2. Infrastructure
- Human resources
1. QTRR Framework
- Policy
- Awareness and culture of QTRR
- Technology
- Risk Management Strategy
Frame
- Methodology
- QTRR philosophy
QTRR
- Procedure
- RR acceptance level
- Report
- Organizational structure and functions
3. QTRR steps
QTRR steps
- Risk identification
- Risk assessment
- Risk management
Source: Ho Bas II
Building a reasonable credit risk management process. To have a reasonable credit risk management process, banks need to establish reasonable credit risk management criteria, appropriate authority decentralization mechanism, reflecting the risk appetite of the Bank. In addition, credit risk management policies go hand in hand with credit growth, lending to high-risk areas such as securities investment, real estate need to be regularly reviewed, ensuring compliance with risk strategy in each period.
Improve the quality of credit risk monitoring and control. According to Basel II, one of the principles of credit risk management is to ensure the effectiveness of internal monitoring and control. This is reflected in the assessment of risk metrics, the quality of risk management, the level of compliance with procedures, regulations, and market risk limits. This work must be performed regularly by risk management departments and other independent monitoring departments.
In addition to building and perfecting the credit risk management framework, banks need to proactively increase equity capital. The first source of additional capital must come from the banks themselves. Banks with low CAR ratios (below 9%, or even above 9% but below 11%) must be required to retain all after-tax profits, are not allowed to pay dividends and are not allowed to buy back shares. This measure is completely reasonable because shareholders must be the first to be responsible for ensuring capital safety for their banks, when the bank is short of capital, shareholders are not allowed to distribute profits. In addition, it may be necessary to supplement capital from other sources such as mobilizing additional equity capital from existing shareholders, domestic and foreign private investors. This is one of the measures that major US banks applied or attempted to apply in 2008 when the crisis broke out. It is worth noting that when a crisis has broken out and the situation has become critical, it is not easy to call on investors to buy your shares and often you have to sell them at a very cheap price. A specific example is Goldman Sachs having to sell $5 billion worth of preferred shares with a 10% yield to Warren Buffett at a price and many terms that are very favorable to Warren Buffett. However, in the condition that current shareholders have run out of capital, inviting outside investors to buy shares seems to be the only remaining solution. However, if you want to achieve the highest efficiency, this solution should be implemented early in a period when the macro economy and stock market are relatively favorable; on the contrary, if implemented during a period of economic recession or crisis, banks often have to accept very cheap prices.
3.2.6 Other solutions
Raising awareness of agricultural households growing CNDN crops about legal regulations, especially regulations related to State management, to the rights and legitimate interests of citizens, regulations directly related to the fields of CNDN crop production activities, related regulations such as environmental protection, protection of water resources, land, and production of high quality products. It is necessary to disseminate and educate the law in the community of CNDN crop production areas to meet the implementation of State management by law.
Law. Timely disseminate the contents of legal documents related to CNDN crop production activities to raise awareness and awareness of law compliance in the community, creating conditions for them to use the law to protect their legitimate rights and interests. Have forms and methods of dissemination and legal education suitable for each subject and locality, ensuring feasibility. It is possible to directly introduce or use means of radio, television, press, publishing books, printing leaflets, posters, building a system of legal bookcases, organizing competitions to learn about the law in the community of CNDN crop production areas.
Find all solutions to continuously reduce costs in the production process to increase profits from CNDN crop production such as: valuing and increasing the use of organic fertilizers. Making high use of plant residues and agricultural waste. Producing organic matter on the spot such as: intercropping beans and green manure in and around CNDN crops. Reducing the amount of chemical fertilizers, applying them properly to reduce losses, avoiding environmental pollution. Using integrated control methods, minimizing the use of chemicals to prevent pests and weeds in the fields. Saving irrigation water. Having a reasonable irrigation regime, avoiding wasting water resources. Paying attention to using drought-resistant varieties. Having a suitable cover crop ecosystem.
Reasonable land use for sustainable development of CNDN crops originates from the actual fertility of the soil, promoting the actual fertility is to improve the efficiency of investment and contribute to solving the difficulty in balancing investment. Investing in organic fertilizers properly for CNDN crops is both highly effective and returns nutrients to the soil to improve soil fertility. Therefore, it is necessary to apply advanced technology in land use for CNDN crops. Specifically, it is necessary to effectively solve the problem of erosion and balance nutrition for plants; apply a farming model on sloping land including intercropping short-term legumes with CNDN crops and dividing the canopy (peanuts, soybeans, ...) to suit the characteristics and requirements of the land and ensure regular harvest; boldly apply the sustainable agroforestry technical model for CNDN crops with a slope of 15-20°C.
3.3 RECOMMENDATIONS
3.3.1 Recommendations to Binh Duong Provincial Government.
3.3.1.1 Formation of concentrated raw material areas
Review and adjust the planning areas for growing cashew, rubber, pepper, coffee, form key industrial crop growing areas, focus on intensive investment, large fields, large farms, on that basis invest in building traffic, irrigation, purchasing and processing networks. Sectors at all levels in the province need to coordinate with other localities with strengths in growing industrial crops, central sectors and scientists to specifically and in detail develop specialized planning areas for each type of industrial crop suitable for soil, climate and product consumption capacity, thereby helping industrial crops develop better.
Strengthening the connection between CNDN tree growers and processing enterprises, building large CNDN tree garden models, and moving towards building CNDN tree material areas for each enterprise.
Enterprises form a stable purchasing network, directly to farmers' organizations, ending the situation of competing to buy and sell, buying and selling through many intermediaries affecting quality and price.
Farmers growing agricultural crops in planning areas approved by competent authorities have the right to use land and assets on land to contribute shares, form joint ventures and associate production with enterprises and benefit or transfer to form agricultural enterprises.
The Association of Vietnamese Industrial Crops organizes and mobilizes enterprises to participate in building large-scale industrial crop gardens and raw material areas, supporting investment, guiding farmers in production and product consumption; proposing a roadmap to require enterprises to have raw material areas. The Vietnam Association of Vietnamese Industrial Crops mobilizes enterprises to build a Fund to support farmers in producing industrial crop plants.
3.3.1.2 Research and transfer of long-term industrial crop planting techniques
day
Scientific and technological research and technology transfer in tree planting
CNDN plays a decisive role in product quality and productivity. Especially
Coffee and pepper plants. The Department of Agriculture and Rural Development and the Department of Science and Technology coordinate with research institutes and localities to prioritize investment capital and human resources to organize research and carry out technology transfer.
3.3.1.3 Forming production organization of long-term industrial crop growers
For each type of tree, reorganize production in the direction of strengthening horizontal linkages between households growing the same type of tree to form production groups: cooperatives, cooperative economic groups, production solidarity groups, high-yield variety clubs, CNDN tree growing farmers' alliances... The formation of production groups aims to create consensus so that they can receive technical advances; market and price information; receive State policies and coordinate together to effectively implement technical measures to increase productivity, quality, efficiency and increase income for the community.
Binh Duong authorities need to encourage and, through farmers' production organizations, implement policies for CNDN plant growers such as supporting seeds, fertilizers, transferring technical advances, implementing preferential policies, and borrowing capital. Periodically organize honoring of good CNDN farmers and plant growing facilities.
The formation of production groups will contribute to enhancing the prestige before the bank, due to the shared responsibility of the group members. Members not only have access to secured credit, but through the group's guarantee, can access unsecured credit.
3.3.1.4 Increase added value in product processing:
Harvesting and preservation are generally still manual, so the productivity and quality of CNDN crops are still quite modest compared to some other countries in the world, leading to the value brought from CNDN crops in the province is not high. Therefore, Binh Duong authorities and scientists are researching to help coffee growers apply advanced technology in production, processing and post-harvest preservation to increase productivity, quality and enhance the value of the product. In addition, it is necessary to promote agricultural extension work,
such as opening training classes for farmers; building production and processing models and replicating the models, building policies to attract good human resources, linking with scientists and research institutes to support training, technical advice and information provision.
Planning and rearranging processing and export enterprises in the direction of gradually reducing the number of focal points and forming large processing facilities. Investing in technical facilities and applying modern technology in the processing stage to increase the processing content of products. Building a quality management model according to international standards ISO, HACCP, GMP, BRC and technical regulations of processing facilities, ensuring food safety.
3.3.2 Recommendations to the State Bank of Vietnam
For the coffee replanting program being directed by the State Bank of Vietnam, many solutions need to be implemented to remove obstacles in the capital disbursement process. The proposed solutions include:
Localities need to grasp the need for replanting in the area to coordinate with the State Bank in supporting farmers to borrow capital in a timely manner, ensuring the effective coffee replanting and renovation season.
The State Bank needs to apply a flexible policy on loan interest rates, setting interest rates lower than the market rate throughout the loan term, not just in the initial period; the loan term should be extended to 7 years instead of 5 years as at present; the maximum loan amount for the collateral value of replanted orchards... to make it easier for farmers to access loans.
Farming households with capital needs for replanting of 50 million VND or less, if they can prove that they have a feasible production and business plan, are eligible to repay the principal and interest of the loan and use the loan effectively, can apply for unsecured loans...
In addition to bank capital, it is necessary to implement comprehensive solutions such as seedlings, techniques, technology, planning and determination from many sectors and levels; in which production households and enterprises are the main driving force, deciding the success of the coffee tree replanting program.