Therefore, bank credit is an economic lever that stimulates the development of economic sectors in production households, creating a premise to attract these sectors to develop in a rhythmic and synchronous manner.
The role of bank credit in politics and society:
Bank credit not only plays an important role in promoting economic development but also plays a huge social role.
Through lending to expand production for production households, it has contributed to solving employment for workers. This is one of the urgent issues in our country today. Having jobs, workers have income, which will limit social negatives. Bank credit promotes the development of industries, solves jobs for surplus labor in rural areas, and limits migration to the city. This is achieved because the development of industries will increase farmers' income, cultural, economic and social life will increase, the gap between rural and urban areas will be closer, limiting unreasonable differentiation in society, maintaining political and social security.
Maybe you are interested!
-
Loan Procedures for Poor Households of Thai Nguyen Provincial People's Credit Fund -
Some Factors Affecting the Quality of Short-Term Loan Services for Business Customers of Commercial Banks -
Current Status of Ksnb Activities for Personal Loan Business at Vib Hue -
Actual Loan Usage Situation of Surveyed Households -
Orientation and Goals to Improve the Quality of Branch Business Loan Services
In addition, Bank credit contributes to the effective implementation of the Party and State's innovation policies, typically the poverty reduction policy. Bank credit promotes the rapid development of production households, changing the face of the countryside, poor households become better off, well-off households become richer. That is why social evils are gradually eliminated such as: Alcohol, gambling, superstition... improving the intellectual level and professional level of the labor force. Through this, we can see
The role of bank credit in strengthening farmers' confidence in general
and of production households in particular under the leadership of the Party and State.
In summary: Bank credit has met the capital needs for household economies to expand production, business, and expand industries. Exploiting the potential of labor, land, water surface and resources for production. Increasing products for society, increasing income for production households.
Create conditions for household production economies to access and apply scientific and technical advances in production and business, access market mechanisms and gradually regulate production in accordance with market signals.
Promote the household economy to shift from self-sufficient production to commodity production, contributing to the industrialization and modernization of agriculture and rural areas. Promote households to calculate and account for production and business, calculate and choose investment objects to achieve the highest efficiency. Create more jobs for workers.
Limit usury in rural areas, limit rice selling
young...
Contribute to the transformation of the rural economic structure, increase the commodity nature of agricultural products in the conditions of developing a socialist-oriented market economy. The Bank expands investment in household economy, implementing the Party and State's goal of developing a multi-sector economy operating under a market mechanism under state management. However, in practical activities for
Loans show that the current mechanism still has many shortcomings such as regulations on mortgages, pledges, loan guarantees, how to handle mortgaged assets? How to connect with other sectors?, the lack of uniformity in sub-law documents has made legal practice because banking activities are still difficult, not yet opened, lending credit to borrowers who cannot repay, how much do organizations and unions bear? In fact, they are only responsible, but the risks and losses are still borne by the Bank. If there are no solutions to remove them, the Bank cannot expand capital investment and improve the efficiency of lending to develop household economies.
1.2.2 The effectiveness of credit for production households.
1.2.2.1 Concept of credit efficiency.
In a market economy, any product produced must be competitive. This means that every product produced must have quality. Economists have commented: "Quality is the suitability of the purpose of the producer and the user of a certain type of goods".
The noun “Credit” comes from the Latin root “Credium” which means trust. Credit is a historical economic category, born and exists in the economy of production and exchange of goods. It is one of the main products of the Bank. This is a form of product with an intangible form, a special service. This product can only be evaluated after the customer has used it. Therefore, it can be considered that the quality of Bank credit is the response to
meet customer needs, meet the needs of Bank development and socio-economic development goals...
Thus, the quality of bank credit is expressed through various perspectives.
after:
For customers: The credit offered by the Bank must be appropriate.
with customer requirements on interest rate (product price), term, payment method, payment form, simple and convenient procedures but still ensure the Bank's credit principles.
For Banks: Banks offer various forms of loans.
appropriate to the scope, level and limits of the Bank itself to always ensure
Competitive, safe, profitable on the principle of full repayment and profit.
1.2.2.2 Credit efficiency assessment criteria.
Currently, credit still accounts for about 60% - 70% of the total assets of commercial banks. Therefore, the existence and development of banks depends largely on credit and credit quality. The assessment of credit quality in banks today is based on the following basic criteria:
a) Qualitative indicators
Guarantee lending principles:
Every economic organization operates on the basis of certain principles.
Due to the nature of the Bank as a special economic organization, its operations affect
deeply affects the economic, political and social situation of the country, so there are
different principles. In which lending principle is an important principle for each Bank.
To evaluate the quality of a loan, the first thing to consider is whether the loan meets the lending principles or not?
In 'Regulations on lending by credit institutions to customers' Issued under Decision No. 1627/2001/QD - NHNN dated December 31, 2001 of the Governor of the State Bank.
In Article 6. Lending principles. Clearly stipulates:
“Customers borrowing capital from credit institutions must ensure:
1. Use loan capital for the purpose agreed upon in the credit contract.
2. Repay the principal and interest of the loan on time as agreed in the contract.
credit.”
The above two lending principles are the minimum principles that any loan must follow.
must be guaranteed.
Conditional secured loans:
This is an indicator to evaluate the quality of bank credit, whether the loan is guaranteed to meet the correct conditions or not?
In 'Regulations on lending by credit institutions to customers' Issued under Decision No. 1627/2001/QD - NHNN dated December 31, 2001 of the Governor of the State Bank.
In Article 7. Loan conditions. Clearly stipulates:
“Credit institutions consider and decide to lend when customers meet the following conditions:
1. Have civil legal capacity, civil conduct capacity and bear civil responsibility
compliance with the law
a) For borrowers who are Vietnamese legal entities and individuals.
- Legal entities must have civil legal capacity;
- Individuals and private business owners must have legal capacity and civil conduct capacity;
- The representative of the household must have legal capacity and civil conduct capacity;
- Representatives of cooperatives must have legal capacity and civil act capacity;
- General partners of a general partnership must have legal capacity and civil act capacity;
b) For borrowers who are foreign legal entities and individuals, they must have civil legal capacity and civil conduct capacity according to the laws of the country of which the legal entity is a national or the individual is a citizen, if such foreign law is prescribed by the Civil Code of the Socialist Republic of Vietnam, other legal documents of Vietnam or prescribed by international treaties to which the Socialist Republic of Vietnam is a signatory or participant.
2. Legal purpose of loan use.
3. Have financial capacity to ensure debt repayment within the committed period.
4. Have a feasible and effective investment project, production, business and service plan; or have a feasible investment project, life service plan that complies with the provisions of law.
5. Implement regulations on loan guarantees according to Government regulations and instructions of the State Bank of Vietnam.”
Evaluation process:
Loan appraisal is a very important job, it is the premise to decide on lending and investment efficiency. Appraisal is the process of analyzing and evaluating the project based on standards, in order to draw conclusions as the basis for making lending decisions.
The appraisal process is the best way for the Bank to grasp information about the legal capacity, ethics, financial situation, debt repayment ability of the customer... This is an indispensable step in the process of deciding to lend and monitor the loan. The appraisal process must comply with the principles, bases, procedures and appraisal content of each Bank. A quality loan is a loan that has been appraised and must ensure the steps of the appraisal process.
The process of appraising a loan for a production household is very complicated due to the characteristics of the production and business of the production household being a general business. Therefore, it requires the appraiser and re-appraiser to be proficient in the profession, understand the law, promptly grasp the tasks of socio-economic development in each period, forecast information, technical economic information, market and financial analysis ability.
can help leaders make lending decisions effectively and ensure quality.
amount of a loan.
b) Quantitative indicators
Quantitative indicators help banks to have a more specific assessment of credit quality, helping banks to have timely measures to handle poor quality loans. The specific indicators that banks often use are:
Loan sales for production households.
Production household loan turnover is an absolute indicator reflecting the total amount of money the Bank lends.
Loans to production households for a certain period, usually one year.
In addition, the Bank also uses relative indicators to reflect the proportion of loans to households.
out of the total loans of the Bank in a year. The proportion of loans to production households = HSX loan turnover Total loan turnover x 100%
Debt collection revenue from production households.
Debt collection turnover of production households is only an absolute indicator reflecting the total amount of money the Bank owes.
Goods recovered after disbursement to production households for a period.
Production household debt collection rate = HSX debt collection turnover
Total outstanding debt of HSX x 100%
To reflect the debt collection situation of production households, the Bank also uses a relative indicator reflecting the proportion of recovery in the total loan turnover of production households of the Bank during the period.