Some issues on banking service activities at the Vietnam State Bank of Vietnam

In early 1999, the State Treasury bond discounting service will be implemented as a premise for developing the discounting service of commercial paper and valuable papers in the near future. Contributing to increasing the Department's income and stabilizing the lives of employees.

Annual service revenue reaches 7 billion to 8.3 billion, accounting for 2% to 3% of total income. In addition, the professional level of staff is increasingly improved, the reputation of the Transaction Office with domestic and foreign customers is increasingly affirmed and is one of the branches with the largest number of customers, with abundant mobilized capital, creating conditions for the Transaction Office to expand business activities and achieve the largest profit compared to branches in the NHCT system.

2-/ Limitations and causes

2.1 Limitations:

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In addition to the achievements, the service activities of

The exchange also revealed some limitations:

- Products and services are still monotonous and not diverse: Services

The main services that the Exchange performs are still traditional services.

such as domestic and international money transfer payments, guarantee services, discounts...

Even within a service type, there is not much diversity, but in payment: Payment tools are not diverse, customers mainly still use payment orders to pay, checks are developed but account for a low percentage, modern payment tools such as payment cards and automatic withdrawal systems are not available. International payment tools are not diverse, mainly using LC, there are no services such as paying by phone or international fast money transfer.

- There are no new services to meet customer needs such as information services, consulting, depository services, services on the stock market...

- The quality of banking services is not really attractive to customers.

with all customers.

Therefore, the Exchange has only been able to maintain its existing customers without fully exploiting potential customers. And the annual revenue from banking services only accounts for 2% to 3% of the total revenue, which is not commensurate with the size of the Exchange.

2.2 Causes:

a-/ Subjective causes:

- The qualifications of the staff of the Vietnam Joint Stock Commercial Bank in general and the Exchange in particular are still inadequate, so they have encountered many difficulties in applying the new model to solve specific tasks. Many staff have only been trained during the subsidy period, are not regularly updated with new knowledge about the market, and many jobs still carry heavy experience from the old mechanism.

The vibrant open economy needs a quality human resource, but in reality, it only meets the requirements in terms of quantity. Although there is a large labor force, there is still a lack of skilled professionals, and those who can undertake foreign economic work and integrate with countries in the region and the world, such as foreign language proficiency, information technology, legal knowledge, and the ability to collect, analyze, and process information are still weak.

- Technical and technological facilities:

The Department's office has been renovated and upgraded to be clean and beautiful, but the area is too narrow, causing difficulties in arranging transaction counters as well as handling business operations. The system of technical equipment has also been invested in and upgraded by NHCTVN to be quite modern to serve the business activities of the Department, but it is still lacking in synchronization and the level of automation is not high, so it has not met practical needs.

Investment in improving payment technology has not gone hand in hand with improving accounting technology and improving the qualifications of staff implementing that technology.

- Information, propaganda, advertising and marketing work has not received regular attention.

At present, the Department does not have a Marketing department in Banking activities.

row.

- The quality of some other banking operations is not high yet.

presently:

+ Poor credit quality: manifested in a thin customer base, most of the outstanding debt is concentrated in a few large customers such as the General Corporation.

Post and Telecommunications Corporation, Electricity Corporation, Railway Enterprise Union, etc. have not really attracted many potential customers. The credit officers' appraisal skills are still weak, some officers lack a sense of responsibility in monitoring and managing loans, resulting in ineffective loans, difficult debt collection, leading to overdue debts arising and tending to increase, and loan interest not being collected.

+ Foreign currency trading: also not meeting the needs of customers due to lack of foreign currency to sell to customers for import-export business activities as well as repaying bank loans, not diversifying foreign currencies as well as diversifying foreign currency trading activities. Therefore, the revenue from foreign currency trading activities is also very modest, even in some years there was a loss like in 1998.

+ Discounting business: still in its infancy, not yet developed, only discounting State Treasury bonds but not yet discounting other valuable papers.

b-/ Objective reasons:

- Socio-economic environment:

The socio-economic conditions in recent years have been extremely difficult, especially after the financial crisis broke out, narrowing a large market for Vietnamese enterprises. On the other hand, the devaluation of currencies in Southeast Asian countries has made our country's goods more expensive compared to their goods. This has caused import and export activities to decrease sharply, leading to a decline in international payment activities.

In 1997-1998, our country's economy showed signs of stagnation and slow growth. Therefore, our country had to face two challenges: the Asian crisis and the decline in development momentum.

The state economic sector is slow to be reorganized, many businesses are operating inefficiently. On the other hand, the level of education is not high, Vietnamese people are still used to buying and selling in cash even for large amounts of money up to tens or hundreds of millions of dong, this type of payment is occupying a strong position in people's psychology. Many people do not know and are not familiar with non-cash payment tools.

On the other hand, people's income is still low, the transfer of salaries of officials and employees into personal accounts is only for a few days, then they have to withdraw to spend, from which the economic content of opening an account has not been implemented. Some large business households, people with high income are afraid of revealing business secrets, afraid of being taxed on revenue, so they do not open accounts to pay through banks.

- Legal environment :

The legal framework for banking activities is still inadequate and inconsistent.

+ For domestic and international payment activities: we do not have foreign exchange law, bill of exchange law, check law,... Meanwhile, some current documents have been amended and supplemented many times, making them difficult to apply and not very legal.

+ The regulations and guidelines for issuing and using personal checks by the Government and the State Bank have raised many problems such as pre-signing the check recipient, regulations on the amount of guarantee, account authorization, etc., which have reduced the attractiveness of using checks.

- Competitive environment .

Currently in Hanoi city, there are 4 large state-owned commercial banks: Foreign Trade Bank, Agricultural Bank, Investment Bank and Industrial and Commercial Bank, and many joint-stock banks, joint-venture banks and foreign banks.

Foreign banks in Vietnam, because they are superior to domestic commercial banks in terms of capital, technology and experience, have increasingly expanded their market share in credit and foreign exchange transactions. Many large corporations in Vietnam have switched to credit and payment relations with foreign bank branches.

The main reason is due to low competitiveness, the current equity capital of industrial and commercial banks is too low, the connection between banks co-financing projects is not familiar, so the financing for large projects of the Corporation is still limited.

The operation of the Exchange compared to the Foreign Trade Bank, a bank with a long history in international payment, international payment at the Vietnam Prosperity Bank in general and the Exchange in particular is a very different activity.

new activity so the Exchange has not attracted the attention of the

domestic enterprises as well as foreign banks.