Solution to Expand Credit for Ecotourism Development at Vietnam Bank for Agriculture and Rural Development

landscape and environmental quality in localities. Priority is given to forming a green growth financial policy framework, perfecting institutions and enhancing the financial and credit operational capacity of commercial banks to serve green growth.

Implementing the National Action Plan on Green Growth for the 2014-2020 period in Decision No. 403/QD-TTg dated March 20, 2014 of the Prime Minister, the State Bank of Vietnam issued Directive No. 03/CT-NHNN on promoting green credit growth and managing environmental and social risks in credit granting activities. In the Directive, the Governor of the State Bank of Vietnam requested units under the State Bank of Vietnam, commercial banks and other credit institutions to implement the following general objectives and tasks:

- Implementing the National Action Plan on Green Growth, from 2015, the banking sector's credit activities need to focus on environmental protection, improving the efficiency of resource and energy use; improving environmental quality and protecting human health, ensuring sustainable development.

- Review, adjust and improve credit institutions to suit green growth goals; focus resources on providing credit for projects and production and business plans that are friendly to the environment and society, contributing to supporting businesses in implementing green growth, thereby achieving green growth goals and sustainable economic development.

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The specific goals and tasks that commercial banks and other credit institutions must perform are as follows:

- Develop and implement solutions to promote green credit growth to encourage environmentally and socially friendly business activities: research and develop green credit products, implement credit programs with incentive policies for projects and production and business plans with green growth goals.

- Improve service quality, facilitate green credit growth, pay attention to funding projects and production and business plans to implement green growth.

- Prioritize granting green credit to economic sectors that conserve, develop and effectively use natural resources; use advanced scientific and technological achievements; use energy economically and efficiently; develop clean energy and renewable energy; use environmentally friendly technology and equipment, and produce environmentally friendly products.

3.2. Solution to expand credit for ecotourism development at Vietnam Bank for Agriculture and Rural Development - Ben Tre Branch

3.2.1. Credit pricing solution group

- Consider the types of fees applied to credit transactions with customers. If any type of fee is found to be really unnecessary, it should be removed from the list of customer fees, because transaction fees increase credit prices, do not create competition with other banks, so customers will not come to the Branch to borrow capital even though they have a need, thereby affecting the MRTD ability of the Branch.

- Reduce credit interest rates to create more competitive interest rates, thereby attracting more customers to borrow capital at the Branch, promoting the ability to expand customers, thereby increasing loan sales and expanding credit balance for the Branch.

- Effective capital management so that the Branch does not fall into a state of capital shortage to meet the demand for loan disbursement to customers, forcing the Bank to borrow overnight or the interbank market with high interest rates to provide credit to customers. From there, the Bank's capital cost increases, causing profits to decrease.

- Develop diverse lending interest rates suitable for each type of customer borrowing to develop tourism. Customers borrowing capital to develop tourism include individuals, households, and businesses, so the Bank should develop lending interest rates suitable for each type of customer. In addition, the purpose of borrowing capital is also different, such as borrowing

capital to renovate gardens for tourism purposes; borrow capital to invest in building motels, hotels; borrow capital to build restaurants, cafeterias, etc. Therefore, the Bank can build a loan interest rate that is different for each loan purpose. In addition, the Bank should have a preferential loan interest rate policy for customers who regularly borrow capital at the Branch but have a good repayment history.

3.2.2. Group of solutions to improve credit service quality

- Establish a DLST credit team, these are experienced people who specialize in appraisal to grant credit to customers who are households, businesses or investors who need capital to invest in developing DLST. People in this credit team with the ability to understand the type of DLST along with professional credit appraisal skills can process customer files quickly and accurately to promptly meet customers' capital needs, creating competition with other banks.

- Strengthen training, coaching, and improve professional qualifications for credit officers serving credit activities for developing sustainable tourism. From there, the assessment of production and business plans or investment projects of customers will be quick and accurate in terms of economic, social and financial benefits to calculate the customer's ability to repay. Valuation of collateral assets in accordance with market prices, as a basis for deciding whether to agree to lend to customers. The decision to refuse or agree to lend is greatly influenced by the appraisal report of the appraisal staff. Therefore, the Branch should create favorable conditions for credit officers to study and improve their professional qualifications.

- Modernizing facilities creates a good image in front of customers because sometimes customers evaluate the bank's business activities based on external appearances such as offices, business equipment, transaction counter layout, etc., are spacious and convenient for customers when entering the bank to transact.

- In addition, the Branch should also effectively apply modern technology because technology not only helps the Bank improve its business processes and transaction methods,

develop new products and services, but also help the Bank build a database of customer information when needed, the Bank can quickly access from the Bank's system. Therefore, the Branch needs to invest in equipping advanced techniques and technology, using software programs that are always updated to evaluate customers and investment projects. From there, classify and rank customers to determine the level of customer reputation, reasonable funding level, ...

- Open more branches and transaction offices in areas with potential for tourism development to facilitate customers who need credit loans from the Branch. In addition to meeting the credit transaction needs of customers, tourists also need to use banking services in tourism development areas. In particular, the number of international tourists visiting Ben Tre is increasing, so the demand for foreign currency conversion or withdrawal of money to serve the tour, shopping for souvenirs, and regional specialties. Therefore, these transactions can create additional revenue for the Branch in addition to revenue from credit activities.

- The service attitude of the staff is one of the decisive factors in the quality of the Bank's credit service. If the consultant is cheerful, enthusiastic, and explains in detail what documents are required for the loan application, what steps are included in the loan process if the customer is not clear, this is simple but helps the customer grasp the information to prepare a valid application if they need to borrow capital from the Bank.

3.2.3. Customer expansion solution group

- Increase capital mobilization, especially medium and long-term capital to meet customers' borrowing needs. To increase MRTD's ability to develop tourism, the Bank must have an abundant source of capital with diverse terms. This is an important condition for the Bank to be able to meet all customers' borrowing needs. Due to the nature of tourism business, customers have a high demand for medium and long-term loans, so the Bank also needs to expand medium and long-term credit. Normally, to provide medium and long-term loans, banks must mainly use medium and long-term capital, because

Because using mobilized capital for the right function and purpose will ensure the safety of the bank's liquidity. However, the structure of mobilized capital of the Bank has an imbalance in terms of short-term capital surplus but lack of medium and long-term capital. Therefore, the Bank needs to diversify the forms of mobilization suitable for each customer group to attract medium and long-term capital, creating a basis for expanding medium and long-term lending to develop sustainable tourism, contributing to bringing income to the Bank.

- Strengthen communication and product promotion so that rural people can easily access information about credit products for developing sustainable tourism at the Branch, product characteristics, information on loan interest rates, repayment period, total amount to be paid each period, etc.

- Strengthen the development of new products with the development of ecotourism. The main credit product at the Branch is lending to customers to invest in ecotourism development. In Ben Tre, there are 2 popular types of ecotourism: garden ecotourism and sea ecotourism, so it is necessary to design 2 separate loan products with their own characteristics. In addition, if based on the target customers borrowing capital, the Bank should design 2 loan products: loans for individual customers (households) and loans for investment projects applicable to cases where businesses participate in ecotourism exploitation but need capital support from the Bank. In addition to lending, the Bank should provide other credit products such as guarantees, discounting of valuable papers, factoring, ... for customers when they need capital to invest in ecotourism development.

- Expanding unsecured loans to customers who regularly borrow capital from the Branch but have a good repayment history. Combined with expanding secured loans with assets formed from loans for investors in developing tourism. In addition, MRTD should allow customers to use loan guarantees with the reputation of a third party or guarantee with assets of a third party to ensure the ability to pay interest and principal to the Bank.

3.2.4. Group of solutions to strengthen risk control with credit expansion for ecotourism development

- Banks need to check whether customers use the loan for the right purpose as committed in the credit contract because if customers use the loan for the wrong purpose, it may lead to the possibility of not being able to recover the loan or being able to recover it but not on time.

- Regularly check the customer's financial situation through the customer's deposit account to assess the Bank's ability to recover debt.

- It is necessary to classify debts and set aside risk provisions from credit activities for tourism development in accordance with current laws.

3.3. Recommendations

3.3.1. For Vietnam Bank for Agriculture and Rural Development

The Vietnam Bank for Agriculture and Rural Development needs to have a specific credit policy for granting green tourism development credit to guide the Bank's branches to implement in provinces and cities with potential for green tourism development. From North to South, each region has the potential to develop green tourism in the future, so the demand for investment capital is very large. Therefore, the Bank should have a credit policy for this type of credit. Because this is a new credit product with revenue that will generate a large source of revenue for the Bank in the future.

3.3.2. For customers who need to use credit products for ecotourism development

3.3.2.1 Improving the capacity of leaders/owners of ecotourism businesses

Leaders/owners of tourism business units need to have knowledge of finance, accounting, and management. Managers need to have basic knowledge of finance and accounting to be able to understand and recognize the importance of transparent financial reporting.

This is because this is one of the concerns of the Bank when granting credit to customers. In addition, the ability to draft a convincing business plan/investment project also depends a lot on the level of understanding of the leader. All of the above factors affect the ability of businesses and individuals to access loans to invest in developing sustainable tourism. In addition, managers need to have knowledge of financial management to avoid falling into a situation where the debt repayment deadline to the Bank comes but the customer does not have the money to pay, affecting the customer's reputation when borrowing from the Bank.

In addition, in a market economy, international economic integration is taking place more and more strongly, the requirement for business management capacity is very necessary for development. A business administrator, an individual owner who is able to grasp and analyze information, predict market demand, tourist tastes, etc. will help businesses and households improve their competitiveness, have prestige, reputation, increase operational efficiency, and capital efficiency. From there, it will gradually remove barriers to accessing loans, especially barriers to loan guarantees. Create advantages for businesses and individuals in accessing credit funding from banks.

3.3.2.2. Focus on accounting work

Tourism business units need to pay attention to organizing accounting, updating accounting books in a timely and complete manner and ensuring the authenticity of information. Currently, there is still a situation where tourism business units hire outsiders to make tax reports and financial reports. In some cases, the accounting books that units provide to the Bank are sometimes just a formality. When bank staff create financial analysis tables based on these figures, the results often lack practicality and authenticity. This is also the reason why the Branch always emphasizes the issue of mortgaged assets as the last resort to recover capital when customers are no longer able to pay. Therefore, tourism business units need to form the habit of recording accounting books completely, accurately and clearly in a way that is consistent with the law.

seriously and honestly, ensuring transparency of information. So that when necessary, can explain bank staff's questions about financial reporting data fluently and convincingly.

3.3.2 3 Increase transparency in financial reporting

Tourism business units need to increase payment activities through banks such as: payment of service fees such as hotels, food, entertainment; payment of employee salaries;... The more transactions through banks, the more advantages there will be when borrowing capital from banks. The cash flows in and out of payment accounts at banks are clearly transparent, which will help banks have a correct assessment of production and business activities and financial capacity of customers applying for loans.

3.3.2.4. Develop a professional business production plan/investment project

Most of the owners of tourism business units often do not have much knowledge in the field of finance and business administration, mainly hire people to do accounting services, and most of the employees do not know how to create a good production and business plan. The content of the plan and production and business plan is still sketchy. Therefore, it is not convincing to the Bank when considering capital support.

First of all, it is necessary to proactively approach, learn and research the mechanisms, policies, conditions and procedures for granting credit of the Bank to access the loan source that suits your needs. Grasp the necessary information and have the skills to work with the Bank. From there, you can improve your ability to build your own business plan and investment project. The fact that the enterprises/owners of the tourism business unit themselves create projects and business plans that are effective and highly feasible. The ability to judge possible situations and timely solutions will make it easier to convince the Bank in granting credit. The business plan must ensure honesty, objectivity, suitability with the current production and business situation, management capacity, and capital capacity of the unit.

Solution to Expand Credit for Ecotourism Development at Vietnam Bank for Agriculture and Rural Development - Ben Tre Branch

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