Solutions to Improve the Efficiency of Internal Control System

Professional, knowledgeable about products and promote communication advantages. Actively market directly to businesses and regularly visit to create connections and develop new customers from old customers.

Second, strengthen market survey, research and assessment to enhance the bank's competitiveness.

One of the most important parts of customer policy is to study customer needs to come up with reasonable and effective products. SMEs operate in many different fields, industries, and scales. Therefore, with this customer group, banks can segment the market according to criteria of scale, economic sector, ownership form, etc. to know what difficulties the business is facing, what advantages it has, and what it needs from the bank. From there, banks can build loan forms and services that suit the needs of businesses, solving the difficult problems of businesses.

Market research also means evaluating and understanding the activities of other commercial banks in the area. Currently, in Bac Ninh province, there are almost all state-owned commercial banks and joint-stock commercial banks with relatively large competitive positions in the market. Accordingly, the market share of Vietinbank Bac Ninh Branch is increasingly at risk of being narrowed, requiring the bank to correctly assess the capacity of competitors and at the same time grasp the promotional activities of those banks. From there, build a competitive strategy for Vietinbank Bac Ninh Branch.

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Third, proactively seek and expand, diversify customer base to achieve a reasonable loan structure.

In order to make lending activities highly effective, banks must always adjust the loan balance structure reasonably. That is the structure according to customer objects, structure according to economic sectors, etc. A reasonable loan structure must be consistent with the development trend of the market economy and create a balance between regions. Currently, the number of small and medium enterprises is increasing, especially private enterprises, joint stock companies, traditional craft villages; the proportion of state-owned enterprises is decreasing.

It is necessary to develop a specific marketing roadmap and plan for each stage and each business sector and customer segment such as construction material businesses, automobile businesses, consumer goods distribution businesses, etc.

Fourth, customer care needs to be focused on.

Over the years, Vietinbank Bac Ninh Branch in particular and Vietinbank in general have had good care activities for individual customers, however, there are still shortcomings in customer care for corporate customers.

For SME customer care policies, more attention needs to be paid to businesses and business owners to create a connection between banks and customers.

Corporate gift giving policy on holidays, founding day, business owner's birthday, etc. Preferential interest rate policy for strategic customers and priority customers.

Build a close, mutually beneficial relationship towards a stable, long-term relationship.

3.2.2. Improve the quality of loan appraisal

The improved quality of credit appraisal helps increase the efficiency of the branch's operations, which is the basis for continued credit growth and attracting new customers because the relationship between customers and banks is a mutual relationship. When customers develop well, it will be a favorable basis for commercial banks to expand lending activities. As for commercial banks, through good management and supervision of loan use, it will contribute to supporting and reminding customers to follow the set plan, in order to avoid using loans for the wrong purpose, leading to inefficiency and directly affecting the situation of the enterprise as well as affecting the quality of credit activities of commercial banks.

Firstly , collect complete and accurate information about the borrower because information plays an important role in effectively assisting the appraisal officer in evaluating and analyzing the loan.

analyze, forecast and make more accurate judgments about customers. It is necessary to strengthen the storage of information of loan customers to ensure that the source of information is disseminated and updated.

Second, analyze and accurately evaluate the financial capacity and business capacity of customers. To accurately evaluate the financial capacity and business capacity of customers through the financial reports provided by customers, officers need to appraise the indicators that are often edited to comply with bank regulations. According to the current lending policy, Circular 39 of the State Bank, the financial reports of enterprises submitted to banks must be audited financial reports, tax reports or submitted to competent state agencies, not self-made internal reports.

Third, to have full information to evaluate and rate customers, lending officers also need to collect and fully evaluate non-financial information. Analyzing information on the quality and operational capacity of the management apparatus, the reputation of the enterprise, the history of transactions at credit institutions, and external factors. Analyzing information and the quality and operational capacity of the enterprise's management apparatus through information on the position of the leadership apparatus in relation to employees to comment on the operational capacity, analyzing information on the professional qualifications and experience of the management apparatus, analyzing the ability to plan policies in production and business such as product strategy, market, customer strategy and development orientation of the enterprise, organizational capacity, production and business plan, product distribution and consumption methods, etc.

Fourth , promptly exploit information on economic developments and adjustments in mechanisms and policies related to appraisal operations. Regularly organize seminars, visits to advanced units, and competitions for excellent cadres so that cadres can learn and gain experience.

Fifth, improve the qualifications of bank staff. Train and develop the capacity of staff directly involved in business and customer management from the step of finding

customer selection, loan appraisal, post-credit monitoring and debt collection. Communicate online training sessions to staff throughout the system, open focused classes and invite experts to share valuable knowledge and experience, encourage each department to organize internal training to improve their qualifications.

3.2.3. Strengthening Bank marketing activities

Marketing is a product of the commodity economy, success cannot be based on tricks, luck but depends on the level and art of each businessman, based on the basis of grasping information, understanding the needs of consumers, thereby creating ways to satisfy customer needs. Banks are organizations that trade money in the financial market, so banks must focus more on researching and applying Marketing to business activities.

Banks need to create more information channels with widespread and popular promotion to help customers quickly access the bank's existing products, helping the bank get closer to a large number of customers. Branches need to establish a specialized Marketing department and have a plan to build a specific Marketing strategy.

Commercial banks play the role of borrowers in capital mobilization activities and also lenders in the economy, however, some banks still hold the concept that customers must come to them. This mentality is especially common in state-owned commercial banks. In the current competitive era, to improve their position, banks must proactively seek customers, expand their markets, especially with small and medium-sized enterprises. On the other hand, businesses in Bac Ninh are often scattered in many districts and towns, so banks need to proactively contact customers. In the search process, banks must combine marketing methods, disseminate necessary information about the bank and establish and maintain sustainable relationships with customers.

Vietinbank Bac Ninh Branch must increase contact with organizations and associations of small and medium enterprises, first of all the Bac Ninh Association of Small and Medium Enterprises, the Development Department.

VCCI enterprises, Department of Planning and Investment of Bac Ninh province. Contacting and learning through the association and coordinating to collect information from management agencies will provide the bank with information about enterprises operating in each field, characteristics of each industry, each type of enterprise. From there, the Branch has more data about customers to be able to approach and offer banking products and services.

3.2.4. Solutions to improve the effectiveness of internal control systems

Risk management is an extremely important step in ensuring the quality of loans and business performance of the bank. To do this well, the Branch itself must seriously implement the sales development stage towards potential and low-risk customers. In the loan appraisal stage, it must be carried out in accordance with regulations, be objective and strengthen pre-lending control stages such as implementing steps on registering collateral, disbursing according to the right purpose, etc. After lending, regularly check the situation of loan use, collateral and have a plan to handle immediately when risks arise. The Internal Control Department of Vietinbank Bac Ninh needs to implement the following solutions:

Ensuring objectivity in inspection and supervision: Inspection work is only truly effective when it is carried out publicly, clearly and transparently, avoiding the mentality of favoritism and cover-up when detecting violations. Inspection is carried out internally within the bank, so it is inevitable that lending officers and inspection officers have a collusive relationship with each other, concealing the customer's status, leading to potential risks for the bank.

Improve the capacity of the internal control system: Inspectors need to regularly update policy documents, ensure inspection quality and make correct decisions, avoiding affecting customers.

Comply with regulations on internal control frequency: Inspection includes two forms, periodic inspection and surprise inspection with the purpose of promptly detecting and preventing situations that may pose risks to the bank. Periodic inspection is not yet seriously implemented at the branch due to subjective mentality.

of loan officers leads to many cases of customers violating conditions during the loan process but not being promptly detected and handled, bringing great risks to the bank.

3.2.5. Effective handling of overdue and bad debts

To do well in developing new loans as well as completing business performance targets, Vietinbank Bac Ninh needs to handle the bad debt problem well, reducing the unit's bad debt ratio to the maximum. To do this well, there must be synchronous solutions in debt handling, from customer relations officers, appraisal officers to debt handling officers, debt handling boards and court agencies, enforcement agencies, etc. Measures such as asset sale agreements, lawsuits must be implemented in the shortest time to quickly reduce the bad debt ratio, reduce provisions for the unit. In addition, zoning bad debts and preventing bad debt from arising are extremely necessary, this must be done immediately after lending, during checks on the purpose of using the loan. If there are signs of arising, debt recovery measures must be immediately applied to avoid the loan turning into bad debt.

3.2.6. Improve staff qualifications and continuously practice professional ethics

The staff is the face of the bank, they are the ones who work directly with customers and customers evaluate the bank through the style, knowledge, and working experience of the staff. Therefore, Vietinbank Bac Ninh Branch must increase investment in human factors.

As a bank officer, each department has a different task, but first of all, they must be trained in working awareness and style when communicating with customers. Therefore, Vietinbank Bac Ninh Branch must regularly conduct tests and exams on professional skills and communication skills with customers. In particular, it is necessary to organize meetings to exchange experiences and handle media crises in order to handle unexpected situations well and maintain the image of the bank. In addition, professional training and understanding of laws and regulations of state agencies are indispensable. Bank leaders and staff need to have regular exchanges to promptly grasp the actual situation.

Like all other commercial banks, Vietinbank Bac Ninh Branch needs to constantly train professional ethics for its staff. This is a strategic factor in developing the bank's brand. The branch needs to build specific professional ethics standards, promote honesty and independence in handling business operations of its staff and management team. Thereby, strengthening inspection, examination, supervision and timely handling of violations.

To do this, Vietinbank Bac Ninh Branch must have flexible, fair and respectful policies for employees. Combined with training, the branch needs to create a healthy working environment, fair reward and punishment policies, and appropriate salary policies to help the bank retain talented people and improve the spirit and quality of its staff. At the same time, each employee must have a sense of autonomy, self-discipline in professional training and take professional ethics as the foundation for all activities. This is the right direction to build a reputable and strong bank.

3.2.7. Strengthen coordination between departments and relevant agencies

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To be able to fully meet the loan needs of SME customers.

However, ensuring compliance with the loan conditions of Vietinbank Bac Ninh Branch requires coordination between relevant departments and relevant agencies such as: updating complete and accurate information from the information system of the State Bank (CIC), notary and certification agencies, Land Use Rights Registration Office, Secured Transaction Registration Center, electronic information system, provincial electronic information portal... to have full information on the general socio-economic situation, the situation of production and business activities as well as factors directly related to the enterprise, ensuring proper settlement of SME loan transactions with the bank.

3.2.8. Strengthening credit risk management in small business lending and

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Risk management is an extremely important step in ensuring quality.

lending and the bank's business performance. To do this well, the Branch itself must seriously implement the sales development stage towards potential and low-risk customers. In the loan appraisal stage, it must be carried out in accordance with regulations, be objective and strengthen pre-lending control stages such as implementing steps on registering collateral, disbursing according to the right purpose, etc. After lending, regularly check the situation of loan use, collateral and have a plan to handle immediately when risks arise.

3.2.9. Establish and use reserve funds in accordance with regulations

Implementing debt classification and risk provisioning for SMEs is a solution to help banks build a credit risk reserve fund to compensate for losses when risks occur. In the recent past, Vietinbank Bac Ninh has mainly applied debt classification by quantitative methods because Vietinbank has not yet completed its own internal credit rating system. The basis for provisioning and assessing the quality of loans for SMEs is based on 5 debt groups according to the regulations of the State Bank. The above situation leads to shortcomings, provisioning is not really accurate, and problem debts are still hidden in the SME loan portfolio. The goal set for Vietinbank is to complete the internal credit rating system to help classify debt and set up risk provisions more accurately and in line with the actual situation of the loan.

3.3. SOME RECOMMENDATIONS

After analyzing the current lending activities at Vietinbank Bac Ninh Branch in the period of 2017 - 2019, it can be seen that the business activities of the Branch maintained a stable growth rate, but there are still many limitations. To improve the efficiency of lending to SMEs, it is necessary to have effective, synchronous and effective measures from state management agencies, the State Bank, Vietnam Joint Stock Commercial Bank for Industry and Trade, SMEs and other relevant departments.

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