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Improving the efficiency of international payment activities by credit method at Vietnam Joint Stock Commercial Bank for Investment and Development - Thanh Do Branch - 1


MINISTRY OF EDUCATION AND TRAINING THANG LONG UNIVERSITY

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GRADUATION THESIS


Improving the efficiency of international payment activities by credit method at Vietnam Joint Stock Commercial Bank for Investment and Development - Thanh Do Branch - 1

TOPIC:

IMPROVING THE EFFICIENCY OF INTERNATIONAL PAYMENT ACTIVITIES BY CREDIT METHOD

DOCUMENTS AT VIETNAM JOINT STOCK COMMERCIAL BANK FOR INVESTMENT AND DEVELOPMENT - THANH DO BRANCH


STUDENT: NGUYEN MINH TRANG STUDENT CODE: A16472

SPECIALIZED IN: BANKING


HANOI- 2014

MINISTRY OF EDUCATION AND TRAINING THANG LONG UNIVERSITY

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GRADUATION THESIS


TOPIC:

IMPROVING THE EFFICIENCY OF INTERNATIONAL PAYMENT ACTIVITIES BY CREDIT METHOD

DOCUMENTS AT VIETNAM JOINT STOCK COMMERCIAL BANK FOR INVESTMENT AND DEVELOPMENT - THANH DO BRANCH


Instructor: Master Ngo Khanh Huyen Student: Nguyen Minh Trang Student code: A16472

Major: Finance - Banking


HANOI - 2014



ACKNOWLEDGEMENTS

First of all, I would like to express my sincere thanks to my teacher - Master Ngo Khanh Huyen for her enthusiastic guidance and comments to help me complete this graduation thesis. I would like to express my sincere thanks to the teachers in the Department of Economics, Thang Long University - who have imparted to me valuable knowledge as a foundation for me in the process of researching and completing this thesis.

I would also like to express my sincere thanks to the staff at Ly Nam De transaction office - under BIDV Thanh Do for creating conditions for me to intern and helping me in the process of learning the actual process of documentary credit payment method.

In the process of doing the thesis, due to limited knowledge, research ability and practical experience, this thesis cannot avoid shortcomings. I look forward to receiving comments and suggestions from teachers.

Thank you very much!


Hanoi, April 2014 Student


Nguyen Minh Trang

COMMITMENT

I hereby certify that this Graduation Thesis is my own work with the support of my supervisor and does not copy the research works of others. The secondary information data used in the Thesis is clearly sourced and cited.

I take full responsibility for this statement!


Student


Nguyen Minh Trang



INDEX

CHAPTER 1: OVERVIEW OF INTERNATIONAL PAYMENT ACTIVITIES AND DOCUMENTARY CREDIT METHODS AT COMMERCIAL BANKS 1

1.1. Overview of international payments 1

1.1.1. Concept 1

1.1.2. The role of international payments 3

1.1.2.1. For the economy 3

1.1.2.2. For bank 3

1.1.2.3. For importers and exporters 4

1.2. Overview of documentary credit method 4

1.2.1. Concept 4

1.2.2. Parties involved in documentary credit method 5

1.2.3. Documentary letter of credit 6

1.2.3.1. Definition 6

1.2.3.2. Main content of documentary letter of credit 7

1.2.3.3. Some types of documentary letters of credit 8

1.2.4. Business process of documentary credit method 9

1.2.5. Legal documents regulating documentary credit methods 10

1.2.5.1. Uniform Customs and Practice for Documentary Credits (UCP).. 10

1.2.5.2. International standard banking practice of checking documents according to L/C No. 681 – October 1, 2008 – ISBP 11

1.2.5.3. ISP 98 11 International Standby Credit Practice

1.2.5.4. UCP 600 Supplement on the Presentation of Electronic Documents eUCP 1.1 11

1.3. The effectiveness of international payment activities by documentary credit method at commercial banks 12

1.3.1. Concept of efficiency of international payment activities by documentary credit method at commercial banks 12

1.3.2. Indicators for evaluating the effectiveness of international payment activities using documentary credit method 13

1.3.2.1. Qualitative indicators 13

1.3.2.2. Quantitative indicators 15

1.3.3. Factors affecting the efficiency of international payment activities by documentary credit method 17

1.3.3.1. Objective factors 18

1.3.3.2. Subjective factors 19

CHAPTER 2: CURRENT STATUS OF INTERNATIONAL PAYMENT ACTIVITIES BY DOCUMENTARY CREDIT METHOD AT VIETNAM JOINT STOCK COMMERCIAL BANK FOR INVESTMENT AND DEVELOPMENT - THANH DO BRANCH 22

2.1. General introduction about Vietnam Joint Stock Commercial Bank for Investment and Development - Thanh Do Branch 22

2.1.1. The formation and development process of Vietnam Joint Stock Commercial Bank for Investment and Development - Thanh Do Branch 22

2.1.2. Operation model of Vietnam Joint Stock Commercial Bank for Investment and Development - Thanh Do 23 branch

2.1.3. Some business performance results of BIDV Thanh Do 26

2.1.3.1. Capital mobilization activities in the period 2011-2013 26

2.1.3.2. Credit activities in the period 2011-2013 31

2.1.3.3. Service activities in the period 2011-2013 33

2.1.3.4. BIDV Thanh Do's pre-tax profit in the period 2011-2013 35

2.2. Current status of international payment activities by documentary credit method at Vietnam Joint Stock Commercial Bank for Investment and Development - Thanh Do Branch 35

2.2.1. International payment process by documentary credit method at BIDV Thanh Do 35

2.2.1.1. Export L/C process 35

2.2.1.2. Import L/C process 37


2.2.2. Analysis of indicators to evaluate the effectiveness of international payment activities by documentary credit method of BIDV Thanh Do 40

2.2.2.1. Analysis of qualitative indicators 40

2.2.2.2. Analysis of quantitative indicators 44

2.2.3. Evaluation of the effectiveness of international payment activities by documentary credit method 52

2.2.3.1. Achievements 52

2.2.3.2. Existing issues 55

2.2.3.3. Causes of the existence 56

CHAPTER 3: SOLUTIONS TO IMPROVE THE EFFICIENCY OF INTERNATIONAL PAYMENT ACTIVITIES BY DOCUMENTARY CREDIT METHOD AT VIETNAM JOINT STOCK COMMERCIAL BANK FOR INVESTMENT AND DEVELOPMENT - THANH DO BRANCH 59

3.1. Orientation for developing international payment activities by documentary credit method at Vietnam Joint Stock Commercial Bank for Investment and Development - Thanh Do Branch 59

3.1.1. General business orientation of BIDV Thanh Do 59

3.1.2. Development orientation of international payment activities by documentary credit method at BIDV Thanh Do in the coming years 60

3.2. Some solutions to improve the efficiency of international payment activities by documentary credit method at Vietnam Joint Stock Commercial Bank for Investment and Development - Thanh Do Branch 61

3.2.1. Solution from BIDV Thanh Do 61

3.2.1.1. Diversify products and services to support payment activities using documentary credit method 61

3.2.1.2. Improving the capacity of payment staff 61

3.2.1.3. Approaching the needs and consulting of business customers 62

3.2.1.4. Implementing preferential policies on international payment service fees under the documentary credit method 63

3.2.1.5. Promoting credit financing activities for importers and exporters 63

3.2.1.6. Development of agent banking system 64

3.2.1.7. Exploiting foreign currency sources, promoting foreign currency trading activities 65

3.2.1.8. Completing the payment process by documentary credit method 65

3.2.1.9. Marketing strategies to attract customers 66

3.2.2. Some recommendations 67

3.2.2.1. Recommendations to the State Bank 67

3.2.2.2. Recommendations to the Bank for Investment and Development of Vietnam 67

3.2.2.3. Recommendations to customers 68


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