Organization of Large Commercial Banks (Source: Phan Thi Thu Ha (2006), Commercial Banks, National Economics University Publishing House)

State management of foreign exchange, establishment of international balance of payments, implementation of foreign exchange operations, foreign exchange trading in international markets.

Preserve state foreign exchange reserves.

Directly sign or be authorized to sign international treaties on currency, credit, payment, foreign exchange, and banking.

Represent the Government at international financial and credit institutions.

Inspecting Credit Institutions in compliance with laws on currency, credit, payment, foreign exchange and banking.

Organizing training in banking techniques.

- Relations between the State Bank and Credit Institutions.

The State Bank grants operating licenses to Credit Institutions, ensuring timely and full payment capacity for Credit Institutions.

Open deposit accounts for Credit Institutions; Lend and buy, sell, discount, and rediscount valuable papers of Credit Institutions.

Only lend to the headquarters of the Credit Institution and not directly to the branches of the Credit Institution.

Credit Institutions are required to maintain: statutory reserve deposits (compulsory reserve deposits) and other sources of funds available for payment, deposits and debts to customers as prescribed by the State Bank. The compulsory reserve ratio is prescribed in accordance with the laws of the State Bank of Vietnam - Law No. 01/97/QH10 and the law amending and supplementing the law of the State Bank of Vietnam - Law No. 10/03/QH11.

Clearing organization between Credit Institutions.

Issuing, buying and selling bonds and organizing the operation of the money market.

- State Bank's relationship with the Ministry of Finance.

Open a trading account for the treasury.

It is possible to negotiate with the Ministry of Finance to act as an agent for the State Treasury in issuing short-term and long-term bonds and paying interest and principal on bonds.

Participate in developing the State Budget plan.

Advances and loans to the State Treasury, advances and loans to the State Treasury are secured by interest-bearing treasury bonds delivered by the Ministry of Finance on behalf of the Government to the State Bank. These bonds have a maximum maturity as prescribed by the Government and can be transferred.

Banks may purchase treasury bonds with a term of no more than one year from Credit Institutions or resell these treasury bonds to Credit Institutions.

Organization of the State Bank of Vietnam

The State Bank of Vietnam is organized into a centralized, unified system consisting of an executive apparatus and operational units at the headquarters, branches, representative offices, and other affiliated units.

The organizational structure of the State Bank is prescribed by the Government.

The organizational structure, tasks and powers of units under the State Bank are prescribed by the Governor of the State Bank in Clause 2, Article 49 of the Law on the State Bank.

The Governor of the State Bank decides to establish and terminate the operation of branches, representative offices, committees and advisory councils on issues related to the functions and tasks of the State Bank; decides to establish and terminate the operation under the authority of units under the State Bank operating in the fields of training, fostering banking profession, research, information, banking scientific theory, providing services related to treasury operations, banking information technology services and payment, and credit information services.

According to the current document, the State Bank includes 18 departments, 63 branches of the State Bank of Vietnam in provinces and cities, a representative office in Ho Chi Minh City, assisting the Governor in performing the functions of State management and the functions of the Central Bank, 04 affiliated enterprises and public service units.

Current organizational chart of the State Bank of Vietnam: (see diagram 2.1)

GOVERNOR OF THE STATE OF BANK

Monetary Policy Department

Department of International Cooperation

Payment

Internal Audit Department

Monetary Statistics Forecasting Department

Issuance and Treasury Department

NH inspection and supervision agency

Department of Information Technology

Credit Department

Foreign Exchange Management Department

Legal Department

Finance and Accounting Department

Department of Organization and Personnel

Exchange

Office of the State Bank

Competition and reward

Administration Department

DEPUTY GOVERNORS

State Bank Representative Office in Ho Chi Minh City

63 State Bank branches

Department of the Central Bank

Banking Strategy Institute

Banking Times

Banking magazine

Credit information center

Banking staff training school

International Credit Project Management Board

Career organizations

Diagram 2.1: Organizational structure of the State Bank of Vietnam

( Source : http//www.sbv.gov.vn – “Introduction to the State Bank - Organizational model” )

2/ Credit Institutions

A credit institution is an enterprise that performs one, some or all banking activities. Credit institutions include banks, non-bank credit institutions, microfinance institutions and people's credit funds [57].

Credit institutions in our country currently include:

+ State Commercial Bank : is a commercial bank established with 100% state budget capital, including: Vietnam Bank for Agriculture and Rural Development; Vietnam Bank for Industry and Trade (equitized); Bank for Foreign Trade of Vietnam (equitized); Bank for Investment and Development of Vietnam.

+ Development Bank : is a state-owned bank formed with state budget capital and funding from other countries such as ODA capital to invest in state economic and technical development projects.

+ Social Policy Bank: is a bank established by the State with budget capital and a portion of capital mobilized annually from State-owned commercial banks (2%) so that this bank operates not for profit but for the purpose of lending for poverty reduction, student loans and loans for overseas workers.

+ Joint stock commercial bank: is a commercial bank formed by capital contributions from shareholders.

+ Joint venture commercial bank: is a bank established with capital contributions from two parties participating in the joint venture. One party is a Vietnamese bank and the other party is a foreign bank. Joint venture commercial banks are headquartered in Vietnam, operate under Vietnamese law and are also subject to the State management of currency and banking activities of the State Bank of Vietnam.

+ Credit cooperative: is a collectively owned credit institution, established with capital contributed by members, mobilizing capital sources from members and lending to members. Credit cooperatives operate according to the functions, tasks, and local scope specified in the charter approved by the Governor of the State Bank.

+ Foreign bank branch: Is a bank established under foreign law, permitted to open a branch in Vietnam, operating under Vietnamese law.

+ Finance company: Is a state-owned or joint-stock company whose main activities are lending to buy and sell goods and services using its own capital or borrowing from residents by issuing treasury bills. It is not allowed to receive savings deposits from residents and does not use residents' loans as a means of payment.

In addition, there are other forms such as: People's credit funds, Financial leasing companies.

Built in the first year of the mechanism transformation, the Ordinance could not meet the development requirements of the financial system in Vietnam in the second half of the 90s. In that situation, the National Assembly passed the Law on the State Bank and the Law on Credit Institutions. At a higher legal level, the Law on Credit Institutions created a new legal environment for the development of banks.

Commercial banks expanded their service to all economic sectors and expanded the market. Many new banking operations were initially implemented, such as pawnbroking, discounting valuable papers, financing sales on installments, leasing credit, bidding for treasury bills, contributing capital to buy shares of enterprises, etc.

In order to improve operational efficiency, commercial banks gradually eliminated intermediary levels, gradually separated policy activities and commercial activities, increased relative independence for branches, boldly innovated technology to suit business management requirements, improved customer service quality, and initially established subsidiaries to implement new operations.

Shareholders meeting

Board of Directors and support apparatus

General Director and staff

Office block

General control block

Organization and training block

Foreign business block

Planning and Market Block

Domestic business block

Financial accounting block

Dependent accounting unit:

- General business branch

- Specialized business branch

- Exchange


	Bank branch Transaction office

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Independent accounting unit:

- Company trading in handicrafts, gold, silver, and precious stones

- Financial leasing company

- Securities company

Member units

Career accounting unit:

- Vocational training center

- Information technology center

- Risk prevention information center

Diagram 2.2: Organizational structure of large commercial banks (Source: Phan Thi Thu Ha (2006) , Commercial banks, National Economics University Publishing House )

Large banks often have many branches, own many companies, operate in many fields, markets and may have many branches abroad. Large banks are banks that provide wholesale services with large customers (corporations, economic groups, etc.). Therefore, the bank's organizational structure must be highly specialized. In specialized departments, there are experts in consulting, market research, financial analysis of companies, industries, countries, experts in lending, securities, law, human resources, technology, etc.

The organizational structure of a large bank is also reflected in the organizational structure of its member units. Branches of large banks are also reflected in the organizational structure of their member units. Branches of large banks include many specialized departments such as corporate credit, consumer credit, appraisal and guarantee, accounting and international payment, trust, etc.

Small banks often have few or no branches, operate within the local area, and have less diversified operations. To adapt to the small scale and low profits, small banks often have a compact organization, each department can perform many tasks, for example, the credit department can provide both corporate and consumer loans, and analyze projects, etc. Small banks require each staff member to be proficient in many tasks. Compared to large banks, the connection between departments of small banks is tighter, and the Board of Directors has a higher control over the departments.

2.1.2 Development of payment service providers and payment activities

2.1.2.1 Organizations providing payment services in Vietnam include:

- Central Bank (State Bank)

- Banks established and operating under the law on credit institutions, including: Commercial banks, Development banks, Policy banks, Cooperative banks and other types of banks.

- Central People's Credit Fund.

- Credit institutions that are not banks are permitted by the State Bank to provide payment services.

- Other organizations that are not credit institutions are permitted by the State Bank to provide payment services.

In fact, when performing payment activities, there are only two levels: the State Bank is both an organization providing payment services and a State manager of payment activities. Second, commercial banks, credit institutions that are not banks or other organizations that are not credit institutions are permitted by the State Bank to perform payment activities. These banks and organizations operate according to the law under the direction and management of the State Bank of Vietnam.

Since the State Bank Ordinance and the Banking Ordinance, payment service providers have gone through many challenges. Up to now, it can be affirmed that their development has been quite rapid, especially in the years when our country was preparing to join the WTO and after joining the WTO, the development can be presented in terms of quantity and quality as follows:

a) Growth in quantity

In May 1990, implementing the Ordinance, the State Bank reviewed, arranged, examined conditions, assessed plans and charters of commercial banks as well as credit institutions voluntarily applying for operating licenses to grant licenses and manage the operating process.

By the end of December 1995, the Vietnamese banking system included:[46, 285]

- The Central Bank (State Bank) has its Headquarters in Hanoi and 53 branches in provinces and cities.

- Commercial banks and finance companies have:

+ 4 State-owned banks (SCBs);

+ 50 Joint Stock Commercial Banks with hundreds of branches nationwide (31 Urban Joint Stock Banks and 15 Rural Joint Stock Banks);

+ 2 joint stock finance companies;

+ 4 joint venture banks;

+ 19 foreign bank branches

- Grassroots people's credit fund system and 3 regional credit funds, 1 central credit fund.