- Improving the capacity and qualifications of the banking inspection and supervision staff: Focusing on improving the capacity and qualifications of the banking inspection and supervision staff to gradually meet the requirements and be commensurate with the rapid, diverse and complex development in the operations of commercial banks is a solution that is both central, urgent and long-term, thereby contributing to improving the effectiveness of banking inspection and supervision.
4.3.3. Group of solutions on bad debt monitoring and handling of violations of the Vietnamese commercial banking system
From the limitations and causes that still exist in the management of the banking system, the work of inspection, examination and supervision of bad debt needs to implement a number of solutions to improve the quality of inspection and supervision of bad debt of the banking system. Specifically as follows:
Firstly , innovate the mechanism for directing and operating the inspection, examination and supervision of banks, synchronize and unify the management work systematically from the central to local levels and create compatibility with the current trend of centralized risk management of commercial banks. Based on the reality, the current mechanism for directing and operating the inspection and supervision of bad debts of the State Bank is concentrated at the central level of the State Bank, leading to a number of violations of bad debt management not being detected and handled promptly. The State Bank needs to clearly define the responsibilities of each position in the inspection agency system from the central to local levels.
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In particular, the dual leadership mechanism in a system of inspection agencies at the same level does not promote the role and responsibility of the inspection and supervision of the State Bank branches in provinces and cities. The organization, decentralization and authorization for the State Bank branches to conduct inspection and supervision of commercial banks in the management area are not specific. Therefore, the comprehensive inspection of bad debts of commercial banks faces many difficulties, and the inspection and supervision carried out have the risk of violations. Therefore, clearly defining the authority, role and responsibility of each position in the inspection agency is really necessary to improve and promote the effectiveness of State management in monitoring bad debts of commercial banks.
In addition, the current decentralization of authority in the inspection of commercial banks causes inspection work to be carried out separately for a branch or department of a commercial bank (Most commercial banks have a nationwide network, and the operation, management and risk management work is concentrated at the head office), leading to a situation where the same bank has different inspection and supervision results between different localities. The results can affect the effectiveness and operational capacity of the State Bank's inspection. Therefore, the State Bank can establish specialized inspection and supervision teams, combine inspection and supervision of the entire system of a commercial bank, or unify the methods, methods and results of bad debt inspection and examination of commercial banks before public announcement.
Second, the State Bank proactively builds and implements recruitment and training of highly qualified human resources, improves professional capacity and political ideology, and professional ethics to promptly adapt to the development of the banking and financial system in the context of deep economic integration.
With a direct decisive role in the effectiveness of the State management of bad debts of commercial banks, the human resources of the State Bank's inspection and supervision agency must have high qualifications and quality, ensuring that they meet the requirements of the task of inspecting and supervising bad debts of the State Bank in the period of international integration. Some specific solutions need to be implemented to improve the quality of human resources serving the inspection, examination and supervision work of the State Bank, including:
First of all, the State Bank needs to clearly recognize the role and importance of high-quality human resources in the sustainable development of the banking system through good management of bad debt in banks. From there, the State Bank and state management agencies can have policies on recruitment, use, support and treatment for the banking inspection and supervision team.
Next, based on the correct understanding of the importance of human resources, the State Bank of Vietnam has developed a strategy to attract talent and a plan to train high-quality human resources for each specific stage, from short-term to medium- and long-term. However, the training of personnel for bad debt monitoring and inspection activities
Commercial banks need to avoid widespread implementation and instead train in specific specialized subjects, training towards international standards.
Unlike the human resources working in other fields, the personnel in the inspection and supervision agency of bad debts of commercial banks need to be fully equipped with knowledge and skills in risk-based inspection and supervision according to advanced inspection standards and techniques such as Basel II and Basel III to be consistent with the trend of applying risk-based inspection methods. Some common skills such as the skills of analyzing and evaluating remote monitoring reports also need to be fully equipped. On that basis, the inspection and supervision team can coordinate smoothly with other agencies in monitoring the bad debt situation of commercial banks.
Finally, the State Bank needs to pay more attention to human resource planning, develop training plans and use a team of experts with good capacity and good moral qualities to improve the quality and promote the role of the State Bank's inspection agency. The solution to train and improve the quality of human resources for the State Bank in general, and for the team of inspectors and supervisors of bad debts in banks in particular, is a strategic solution and implements strategic tasks in each field of operation of the State Bank.
The management and use of human resources in inspection agencies are not really suitable from the central to local levels. In addition, the arrangement and assignment of inspection and supervision positions are only under the authority of the SBV director at each level, causing difficulties in the management and arrangement of inspection forces during inspections as well as in regular programs and tasks. The arrangement of inspection staff is not used flexibly, reducing the quality of bad debt inspection and supervision programs of commercial banks due to not meeting the human resource requirements.
In general, to effectively carry out the work of monitoring and inspecting bad debts of commercial banks, the State Bank of Vietnam needs to improve the banking inspection and supervision agency in the direction of enhancing independence and unity in personnel organization, professional activities and the direction and operation of inspection and supervision from the central to local levels under the leadership and direction of the Governor of the State Bank.
For the financial supervision system, it is necessary to gradually improve and enhance the system's capacity, focusing on restructuring the current financial supervision system on the basis of ensuring synchronization and unity in the three fields of banking, securities and insurance. In addition, the State Bank needs to have a clear division of responsibilities and authority, and the independence of the supervision agency.
Third, continue to strengthen inspection and supervision of the implementation of regulations on credit granting, operational safety and debt classification, and risk provisioning of credit institutions; strengthen management, inspection, and supervision of the monetary, banking, securities, insurance, and state-owned enterprise sectors.
- Review the provisions in Decision No. 83/2009/QD-TTg dated May 27, 2009 of the Prime Minister and the Decisions of the Governor of the State Bank of Vietnam on the functions and tasks of the Banking Inspection and Supervision Agency.
- Issue Circulars regulating the process and procedures for bank inspection.
- Issue regulations on handling the relationship between the Banking Inspection and Supervision Agency and the State Bank of Vietnam's provincial and municipal branches regarding the decentralization of inspection and supervision responsibilities and leadership and management relationships.
Fourth, to improve the quality of bad debt management of commercial banks, the State Bank needs to innovate its methods of bank inspection and supervision, and promote the operational efficiency of the entire banking inspection system from central to local levels.
The State Bank needs to build a remote monitoring system and conduct regular and continuous monitoring to provide early warnings of risks to commercial banks in the banking system. Thereby ensuring timely detection of debts at risk of becoming bad debts and possible violations in the process of handling bad debts of commercial banks. Build a micro-safety monitoring system according to the Camels method based on international standards to monitor the risk of bad debts for each commercial bank. The micro-safety monitoring system is built including: a system for rating and evaluating credit institutions according to standards, an information and reporting system for micro-safety monitoring, a system of standard procedures and tools, a system of financial analysis skills and monitoring and warning activities for types of risks in commercial banking activities.
The macroprudential supervision bank monitors risks and bad debt risks for the banking system. In parallel with macroprudential supervision, the State Bank proactively controls crises and incidents in banking operations by building an early warning system, promptly monitoring, detecting and preventing risks that increase bad debt in commercial banks.
Gradually change the inspection method from compliance monitoring to risk assessment-based inspection. Specifically, inspect, monitor and evaluate the risks of commercial banks, the quality and efficiency of the commercial bank risk management system and the unit's ability to handle bad debts. At the same time, the SBV inspection and supervision agency needs to continue to improve the on-site inspection method, combining compliance with the law and risk-based inspection. Thereby, assess and promptly detect violations of commercial banks in bad debt management.
In order to effectively monitor and control bad debts of the Vietnamese banking system in the coming time, the State Bank needs to conduct a general inspection and examination of the operations of banks to promptly detect and strictly handle violations. This will create a foundation and motivation to effectively carry out the work of monitoring and controlling bad debts of commercial banks in the next stages. Some specific measures need to be implemented regularly and continuously throughout the industry such as:
Directing inspection and supervision agencies at all levels from central to local levels to proactively review internal procedures, especially the procedures for managing and handling bad debts, setting up reserve funds, and managing operational risks at commercial banks, promptly detecting violations in bad debt management.
The State Bank needs to proactively inspect and review the implementation of internal procedures, regulations and legal regulations by the staff, civil servants and employees in the State Bank's inspection agencies at all levels. Ensure that the inspection and supervision operations are carried out effectively. Regularly organize the arrangement and rotation of staff between inspection agencies to minimize fraud and scam cases with the assistance or intentional violations of inspection officers.
In the work of inspecting bad debts of commercial banks, the State Bank needs to regularly organize assessments and summarize the results of inspection and supervision at banks, report violations and risky crimes in the field of management and handling of bad debts at commercial banks to promptly warn, identify and handle similar violations in the banking system. At the same time, promptly issue directives on strengthening prevention and limiting the increase of bad debts in the commercial banking system, contributing to stabilizing the monetary and financial markets.
The State Bank of Vietnam needs to regularly organize conferences to strengthen the work of ensuring security and safety in banking credit activities with the participation of relevant ministries and departments to thoroughly grasp and require commercial banks to detect, prevent and handle bad debts in accordance with regulations, limiting violations. Along with thoroughly grasping financial and monetary policies, the State Bank of Vietnam needs to strengthen propaganda and dissemination of laws on currency and banking, propaganda of the fight against corruption, thereby improving the effectiveness of inspection and examination of bad debts of commercial banks.
Gradually change the inspection method from compliance monitoring to risk assessment-based inspection. In order to effectively monitor bad debts of the Vietnamese banking system in the coming time, the State Bank needs to conduct a general inspection and examination of the operations of banks to promptly detect and strictly handle violations. This will create a foundation and motivation to effectively perform the inspection and supervision of bad debts of commercial banks in the next stages. Specifically, inspect, monitor and evaluate the risks of commercial banks, the quality and efficiency of the risk management system of commercial banks and the ability to handle bad debts of the unit. At the same time, the State Bank's inspection and supervision agency needs to continue to improve the on-site inspection method, combining compliance with the law and risk-based inspection. Thereby, assessing and promptly detecting violations of commercial banks in bad debt management.
Fifth, the State Bank needs to continue to expand international cooperation in the banking sector. From there, strengthen the cooperative relationship between the State Bank and international financial and monetary organizations, expand and maintain bilateral cooperation with banking organizations of other countries. Through that, learn from experience in management work.
bad debt of commercial banks. Exploit and effectively use foreign resources through technical assistance, policy advice and training support from other countries to improve the quality of bad debt management of commercial banks.
In general, to effectively carry out the work of monitoring and inspecting bad debts of commercial banks, the State Bank of Vietnam needs to improve the banking inspection and supervision agency in the direction of enhancing independence and unity in personnel organization, professional activities and the direction and operation of inspection and supervision from the central to local levels under the leadership and direction of the Governor of the State Bank.
4.3.4. Group of solutions on handling violations of the Vietnamese commercial banking system
From the limitations and causes that still exist in handling violations of the commercial banking system, in order to improve and enhance the quality of handling violations of the Vietnamese commercial banking system, the State Bank needs to innovate the handling of violations in a more positive direction, in accordance with the changing and developing needs of the monetary market as well as Vietnamese commercial banks.
Firstly , the State Bank of Vietnam and the State management agencies need to continue to improve the institutional system of State management for commercial banks, especially the system of legal documents regulating the handling of violations in the Vietnamese commercial banking system. In the coming time, the State Bank of Vietnam needs to complete the synchronization of the system of documents guiding the implementation of the State Bank Law and the Law on Credit Institutions 2010, some areas need to be focused on to create the foundation and basis for handling violations of commercial banks.
Initially, the State Bank needs to focus on perfecting the system of legal documents regulating the methods of planning and operating monetary and financial policies, regulating the policy coordination mechanism between the State Bank and the Ministry of Finance in planning and operating monetary and fiscal policies, including specific regulations on regulating the operation of the monetary market and documents regulating the banking credit mechanism for the economy. From there, there will be specific regulations on the roles and responsibilities of the parties in handling violations of commercial banks.
Next, on the basis of the system of legal documents on the method of operating monetary policies that has been completed, the State Bank has developed a system of documents regulating the licensing, inspection and supervision of banks to clearly and specifically stipulate the responsibilities and legal authority of the State Bank, the state inspection and supervision agencies in supervising and ensuring the safety of the entire banking sector. The system of documents regulating the safety ratios in banking activities. The system of documents related to licensing, inspection and supervision issues issued is the basis for the State Bank's inspection and supervision agencies to assess and detect violations, thereby taking measures to handle violations in accordance with the actual situation of commercial banks.
A complete system of legal documents is the basis for the State Bank to promptly detect and handle violations of the law. Therefore, completing regulations on legal forms, scope of operations and types of services allowed to be provided by Vietnamese commercial banks and regulations related to foreign exchange management, reforming the banking accounting system in accordance with international accounting standards and regulations on non-cash payments is a fundamental solution for the State Bank to effectively perform its task of managing and handling administrative violations of Vietnamese commercial banks.
In general, to have a stable basis and foundation for handling violations of commercial banks, the State Bank needs to have a complete legal environment that is suitable for the actual situation of the Vietnamese financial and monetary market as well as in accordance with international standards. Therefore, the State Bank and the State management agencies need to gradually build and complete the system of legal documents related to banking activities according to international standards and practices. At the same time, the State Bank needs to issue and apply international standards and practices on safe banking operations according to Basel II standards and begin implementing Basel III in 2020 to suit the conditions of deep integration into the economy.
Second , it is necessary to continue to promote information and transparency in the handling of violations of Vietnamese commercial banks. In order to have both a basis for handling violations and a basis for reporting the results of handling violations of commercial banks, the State Bank needs to develop and implement a communication strategy related to the handling of violations at commercial banks.