projects in the last 1 to 3 years (for projects that are production and business establishments); have the ability to speculate and evaluate the project situation in the coming years in terms of product consumption, meeting standards or product quality in the future; have the ability to evaluate the project's economic effectiveness, attracting labor, social efficiency or environmental impacts when implementing. With those requirements, the People's Credit Fund, Hanoi Branch, needs to focus on recruiting and arranging credit officers. Every year, the People's Credit Fund, Hanoi Branch, needs to organize training courses to improve the quality of officers by self-training or sending them to the People's Credit Fund Training Center, or specialized training schools in the fields of finance and banking.
Credit officers need to expand information collection during the appraisal process to have a deeper assessment of the project's prospects and feasibility when the project is implemented. Sources of information collection include: collecting information directly from customers; collecting information from projects that have previously received loans from the Social Policy Bank, Hanoi Branch; collecting information from outside, from the internet... to accurately assess the movement trends of the market, of the investment project and predict possible risks, ensuring that appraisal conclusions are correct and consistent with reality.
Closely coordinate and improve professionalism in appraisal work with entrusted organizations such as Women's Union, Youth Union, Veterans Association, and Farmers' Association.
Improve the quality of loan security forms: mortgage, pledge, mortgage guarantee to ensure the ability to recover capital when the project is risky.
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GQVL capital is a preferential policy capital source. Therefore, one of the effective solutions to improve the efficiency of capital use, the work of checking and controlling the use of capital after borrowing is extremely important.
In addition to avoiding the abuse of preferential capital, strengthening the inspection of loan use aims to detect and correct project owners who use loans for the wrong purposes, not bringing about economic and social efficiency as committed.
Specifically, we need to focus on the following main contents:
- Check the scale and production capacity of the project when there is additional capital.
- Check tools and equipment added after borrowing.
- Check the number of newly attracted workers.
Strengthen inspection of loan use, grasp information about borrowers. It is necessary to improve the quality of operations at transaction points, have a smooth information system from the central to the commune level (both the Social Policy Bank and the entrusted unit). At the same time, conduct in-depth credit inspections. The central and provincial Social Policy Banks establish credit inspection teams and enhance the self-inspection role of the district Social Policy Banks to detect errors and take timely remedial measures to limit risks and reduce overdue debts.
Special attention should be paid to inspections before, during and after lending to ensure compliance with credit procedures to minimize risks that may occur during the lending process. Post-lending inspections require the coordination of Hanoi Social Policy Bank staff, staff of the People's Committee, and agencies implementing the local loan program. Project owners should not self-inspecte the use of loans by member borrowers.
3.2.6. Some other solutions
3.2.6.1. Strengthening vocational guidance and training for workers
It is necessary to identify and evaluate the advantages of each region and the labor resources of each locality in the city, thereby orienting what occupations should be developed, what animals should be raised, and what plants should be grown to suit the characteristics of each locality, in order to promote the comparative advantages of the available resources.
In addition to career orientation, vocational training for workers is also particularly important. For those who have a career, it means they have a quality labor force. If supported with capital resources, these people will use and develop capital better than those who do not receive vocational training.
Orientation and vocational training for them to have a career and borrow capital to develop production must be suitable to the terrain, climate and soil characteristics of each region.
3.2.6.2. Coordinate with agricultural extension centers, forestry extension centers, and vocational guidance centers to support cultivation and livestock breeding techniques and develop occupations.
Most of the loan projects in rural areas use capital for agricultural purposes, which are cultivation and livestock breeding. Therefore, to improve the efficiency of loan use, the Hanoi Branch of the Vietnam Bank for Social Policies needs to coordinate with mass organizations and district agricultural extension centers to provide guidance on livestock breeding and crop breeding techniques according to the purpose of the loan. For urban areas focusing on vocational development projects, the Vietnam Bank for Social Policies needs to coordinate with vocational training centers and vocational associations to provide vocational technical support after receiving loans.
To do this, through specific methods:
Coordinate with agricultural and forestry extension centers and vocational training centers to organize training courses for borrowers in each district, by commune or commune cluster.
Integrate with non-governmental projects such as: Sharing project, Poverty Reduction project, Rural Development project... to provide direct training or through leaflets and posters guiding livestock and crop farming techniques.
Each credit officer when going to the grassroots also plays the role of a propagandist, a tour guide introducing good production business models and new business directions of this locality to other localities.
3.3 Some recommendations
3.3.1 Recommendations to the Social Policy Bank
- Have a mechanism to add more capital to the National Fund for Disaster Prevention and Control every year. Allocate capital promptly and quickly to branches so that branches can be more proactive in transferring it to project owners.
- Increase loan levels for production and business projects and workers.
- It is necessary to study to further reform administrative procedures in the direction of streamlining, reducing unnecessary procedures and documents, and instruction forms must be detailed, specific and clear.
- Increase investment capital attraction from Investors who entrust loan capital through the Social Policy Bank, especially projects of non-governmental organizations to supplement loans.
- Take advantage of the support of capital sources from the annual local budget transferred to the People's Credit Fund for lending.
- Strengthen coordination with all levels, sectors, and entrusted organizations to effectively implement preferential credit for GQVL in the area; promptly report to the City People's Committee any difficulties and problems for resolution.
- Strengthen the inspection of loan use. Urge on due debts to ensure avoiding loss of State capital.
- Perfecting loan policy in GQVL lending
Regarding the loan amount: through the assessment of the borrowers, it shows that the loan amount is still low, not meeting the needs of the customers, therefore the borrowers have to adjust the business plan to a lower level or not implement the right purpose because the capital source is not enough to meet the needs. For the project to be feasible and bring economic efficiency, the Social Policy Bank needs to study and increase the loan amount to match the production and business plan of the project. Specifically:
The current maximum loan amount is 100 million VND/customer in rural areas, which is considered low according to surveys. With this loan amount, if customers use it for livestock or farming, it only stops at buying breeds, not to mention investing in barns and feed. Or if investing in farming, it is only a part of the capital for seedlings, not to mention the annual land preparation and fertilizer stages. To ensure meeting the capital needs of customers to develop larger production, avoiding fragmentation, the People's Credit Fund needs to raise the loan ceiling to 150 million VND/customer. From there, if projects have low demand, a lower loan amount will be approved.
Regarding loan term: implemented according to Official Letter 8055/NHCS-TDSV of the General Director of the Social Policy Bank, in which the Social Policy Bank has stipulated the loan term for each industry and business sector. However, in reality, there is a delay from the time of loan project establishment to capital disbursement, which is why many projects are not implemented properly.
Therefore, the People's Credit Fund needs to have flexibility in terms of time or in other words, increase the loan term compared to current regulations to suit the production and business cycle of the project. Specifically:
Investment projects to purchase machinery and equipment and expand factories have a depreciation period of 7 years or more. However, the Social Policy Bank is currently lending for 3 years, during which time businesses cannot recover capital in time to repay the bank. Therefore, the Social Policy Bank needs to base on the actual investment situation and the business cycle of the enterprise to increase the term accordingly.
For rural customers using capital to invest in large-scale livestock farms, the loan term needs to be increased from 24-36 months to 36-48 months. For livestock breeding projects (such as breeding cows), the current loan term is 36 months. With this period, if the borrower sells a newborn calf, it will not be enough to repay the loan, but must also sell the mother cow to repay the bank, not to mention when buying a young breeding animal after 2 years, the cow has not reached the reproductive age, and the debt repayment period has come. Therefore, the People's Credit Fund needs to consider more specifically to regulate the loan term for each investment sector, in accordance with the growth cycle of each type of crop and livestock.
Perfecting the lending process
Procedures, appraisal and approval of loans are still cumbersome, making it difficult for borrowers to access policy capital. Therefore, the Social Policy Bank, Hanoi Branch, needs to:
Firstly , continue to improve the management mechanism of the National Fund for Poor People's Credit Fund in the direction of shortening the lending procedure, simplifying publicity, and avoiding causing inconvenience to borrowers. Specifically: Currently, the Social Policy Bank lends for poor people's credit on the basis of decentralizing project approval according to the loan amount. The loan amount of the program is not large, maximum 2 billion VND for the project applying for a loan. In fact, some commercial banks also conduct decentralized appraisal and loan approval, but for transaction offices, they are allowed to approve projects up to 2 billion VND. To improve the quality of lending, it is necessary to reduce the decentralization of appraisal through many levels and completely assign the appraisal task to the District-level Policy Bank so that the Provincial Bank can focus on general direction and capital allocation.
Second , it is necessary to shorten the appraisal time from 10 days to 5 days.
Third , develop a guide to the lending process for GQVL, and at the same time open training courses for staff to learn about the lending and appraisal process, combined with retraining for staff of political and social organizations and the Management Board of Savings and Credit Groups on lending entrustment operations.
Finally , assign a person with appropriate qualifications and capacity to evaluate and approve the project to replace the main authority of the project when they are on business trips, attending meetings, etc. to avoid the project being blocked during project implementation.
3.3.2 For Hanoi City People's Committee
The City People's Committee needs to research to orient the economic development of each region and locality according to the advantages of each region. In addition, there should be a direction to support vocational training and business techniques.
The City People's Committee needs to have synchronous policies to create an open, transparent, and highly competitive investment and business environment (with investment incentive policies, financial policies, taxes, site clearance, etc.).
In the annual Resolution of the City, it is necessary to focus on and include the goals of solving and creating jobs for workers. There is a plan to assign to relevant functional units to implement, at the same time assigning specific targets of how many jobs can be created for workers, and how many percent of unemployment can be reduced. Evaluate the annual implementation results, using socio-economic development targets as the basis for emulation and reward consideration.
Establish financial consulting, investment consulting, and agricultural technical consulting organizations in collaboration with the Hanoi Branch of the Vietnam Bank for Social Policies to orient and form large job creation projects for the city.
Annually, the city's budget is supplemented to the local GQVL loan source at the Hanoi City Social Policy Bank.
3.3.3. For the Representative Board, authorities at all levels and entrusted organizations.
3.3.3.1. For the Representative Board, authorities at all levels.
Propose to the Board of Representatives at all levels from City to District to further enhance the role of direction and management. In fact, the Board of Representatives operates
The activity has not been really effective. In recent years, overdue debt for GQVL loans has tended to decrease, however, the overdue debt balance is still high, so it is necessary to pay more attention and direct the propaganda work more widely to the masses, only the authorities at all levels coordinate to completely handle overdue debt. From there, develop GQVL lending activities more effectively.
Strengthen self-inspection and specialized inspection with the participation of inter-sectoral agencies on GQVL credit loans. Direct the People's Committees at lower levels to coordinate with village heads and savings and credit groups to evaluate households that borrow capital for the right subjects, and urge the collection of overdue debts to improve the quality of GQVL credit loans.
The poverty reduction committees at all levels need to assign specialized staff to monitor policy credit work. The assigned staff must be those who have a firm grasp of and understand the lending process, and must open books to monitor lending activities at the Social Policy Bank, Hanoi Branch. Avoid the situation where a commune or ward staff takes on many tasks, including managing lending to policy beneficiaries in general and lending to poor households in particular. In that case, lending to policy beneficiaries at the Social Policy Bank, Hanoi Branch is not focused on, causing the quality of lending to decline, thereby affecting the development of lending to poor households.
3.3.3.2. For socio-political organizations receiving entrustment.
It is necessary to strengthen guidance on the transfer of science and technology, create production and business linkage models so that poor households and households borrowing capital from policy banks can use capital most effectively, shorten the time to escape poverty and become rich.
It is recommended that socio-political organizations receiving City-level authorization further strengthen the direction of organizations at all levels to effectively implement the authorization stages, closely coordinate with the Vietnam Bank for Social Policies, Hanoi City Branch in consolidating and improving the quality of the GQVL Credit Program. Strengthen the appraisal, inspection and supervision of borrowers before, during and after borrowing to ensure that borrowers use the loan for the right purpose, effectively, thereby avoiding overdue debt.
CONCLUDE
Implementing the Party and State's policies and guidelines on policy credit, in recent years, the Hanoi Branch of the Vietnam Bank for Social Policies has transferred preferential capital to poor households and policy beneficiaries in the city, contributing to economic development, poverty reduction, and political stability. In addition, the operating model at the Vietnam Bank for Social Policies has mobilized the combined strength of the entire political system and the entire society to participate in the cause of poverty reduction initiated and directed by the Party.
Through analyzing the current status of the quality of GQVL loans at the Hanoi Branch of the Social Policy Bank, it can be seen that this activity has achieved positive results. In addition to the achieved results, the quality of GQVL loans at the Hanoi Branch of the Social Policy Bank has also revealed shortcomings and limitations such as: overdue debt of the GQVL loan program is still high compared to the general overdue debt at the Hanoi Branch of the Social Policy Bank, the ratio of GQVL loan balance at the Hanoi Branch of the Social Policy Bank to the total outstanding debt is still low and tends to decrease over the years, the remaining capital of the entrusted units is still high, the loan term is still short, the loan amount is still low, the lending procedures are cumbersome, too many procedures make it difficult for borrowers to access the GQVL loan program, especially in rural areas, remote areas of Hanoi city...
Based on the analysis of the existing problems, limitations and causes leading to the existing problems in the quality of GQVL loans in the past time, combined with the credit development orientation and requirements for the quality of GQVL loans applied at the Social Policy Bank, Hanoi Branch in the coming time, the author has proposed solutions to improve the credit quality in GQVL loans at the Social Policy Bank, Hanoi Branch.
Thus, the content of the thesis has completed the set objectives including:
Firstly , systematize the theoretical basis on the quality of GQVL loans of the Social Policy Bank.
Second , analyze and evaluate the current status of GQVL loan quality of Hanoi City Social Policy Bank Branch in the period 2017-2019.