+ Debt restructuring: Analyze the current status of overdue debts, potentially risky debts and debts that have been processed to assess the recovery ability through analysis of secured and unsecured debts, the current status of mortgaged assets that can be processed for debt recovery, handling plans and applying solutions and policies of relevant departments in handling outstanding debts.
+ Resolutely handle cases where businesses are slow to pay debts, such as seizing assets or filing lawsuits.
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+ Closely cooperate with local authorities, relevant functional departments in lending, debt collection, debt settlement, and handling of collateral for loans of SMEs.
* Strengthen management of loans for SMEs
+ Monitoring the use of borrowed money by enterprises is an effective measure to prevent moral hazard. Monitoring helps the Bank control the behavior of borrowers, ensuring that capital is used effectively and for the right purpose.
+ If monitoring is not done regularly and closely, businesses are likely to use borrowed money for other purposes, leading to credit risks.
+ Credit officers must grasp the customer's sources of income and require customers to make payments to the bank. Regularly checking customer accounts is a way to assess whether the customer's financial status is healthy or not. If there are difficulties during the project implementation phase, failure to follow the plan can cause risks to the bank, credit officers must work with the project owner to find a solution, request to adjust the production and business plan or have measures to collect the debt.
*Strengthening financial appraisal of projects of SMEs
The bank's project appraisal for businesses is indispensable when making a loan. For medium and long-term loans, the appraisal is very complicated and difficult, requiring the ability to analyze, evaluate and forecast accurately by credit appraisal officers about the customer's projects.
Credit officers not only act as analysts and evaluators but also as experienced consultants who can provide useful advice for customers' projects. This not only benefits customers but also ensures the safety of bank credit capital. Therefore, in the lending process, doing a good job of credit appraisal contributes significantly to the effectiveness of the credit.
Over the years, the Joint Stock Commercial Bank for Foreign Trade of Vietnam - Quang Binh branch has performed quite well in the credit appraisal stage, so the ratio of long-term overdue debt to total outstanding debt has always been controlled at a low level. However, the credit appraisal has only stopped at the credit appraisal of the effectiveness of investment projects or production and business plans through the assessment of economic efficiency indicators. Another very important area that has not received due attention is the appraisal of qualitative indicators for directors of borrowing enterprises.
In addition, the speed of debt collection of enterprises depends largely on the compatibility between the loan term and the production and business cycle. That compatibility is shown in when the enterprise generates revenue and that is the source of debt repayment to the Bank.
Thus, the problem is to standardize the team of credit officers and employees of the bank. The bank needs to have a training plan for credit officers and employees to train them to create synchronization in the bank's credit business activities, along with forms of material rewards worthy of the results that credit officers bring to the bank, and apply strict handling to credit officers who do not have a sense of responsibility for their work, causing more overdue debts.
*Strengthen inspection and control activities
+ Developing SME credit in parallel with limiting new overdue debts, by measures such as: Limiting and gradually eliminating investment in inefficient businesses, firmly assessing arising loans, regularly checking and controlling before, during and after lending. A loan must be controlled many times to grasp the situation of cash flow fluctuations and have a direction to collect debt, and handle it promptly when there is a bad trend.
+ Gradually increase the ratio of loans secured by assets in total outstanding debt as managed
Shipment management, mortgage of assets formed from loan capital, for units.
+ Quarterly, the organization analyzes credit quality, evaluates and classifies debts to have solutions for each type of debt.
+ Classify businesses to fully evaluate all aspects of the business for investment.
+ Fully implement lending procedures in accordance with credit regulations
of the industry as well as guidance of the Joint Stock Commercial Bank for Foreign Trade of Vietnam.
+ Improve appraisal quality for credit officers.
+ Change investment structure, increase the proportion of medium and long-term investment, balance between investment
economic components
+ Regularly organize self-inspections by topic to ensure proper implementation of procedures and regulations, ensuring efficiency and capital safety.
Banks should build a qualified warehouse system to manage materials, goods, and mortgaged assets: If the bank has adequate and qualified warehouses, it can accept assets formed from loan capital as goods and materials to ensure mortgage release based on the borrower's payment...
*Diversify lending forms
With the motto “don’t put all your eggs in one basket”, the Branch should not focus too much on lending to one industry, economic sector, loan term and diversify customer portfolio. The Branch needs to determine the target at each time, carefully research the market to come up with appropriate policies so that the profit is the largest.
To achieve the above, the Branch needs to carefully study market trends, understand the needs of each customer, and from there advise customers to choose the appropriate form of loan. In addition, the Branch needs to diversify its service types to best meet the needs of customers.
Thus, diversification in lending helps the Branch minimize risks, while attracting new customers, reducing costs, and increasing profits for the Branch.
*Simplify loan procedures
Banking business is a risky business, so capital safety is always a top priority. Therefore, when lending, banks often set out very strict loan conditions to ensure capital safety and ensure profits. However, customers who borrow capital are always afraid of cumbersome approval procedures, which are troublesome for customers to transact with. This is a huge barrier that often causes customers to feel apprehensive.
Therefore, banks need to simplify loan applications, unify forms and quickly carry out these procedures. Some procedures can be done by banks on behalf of customers because banks will be faster, less time-consuming and can spend more time on appraisal, inspection and actual supervision.
For duplicate documents, it is possible to remove them, for example: For regular customers who have borrowed short-term loans many times, it is possible to remove the financial status report of the enterprise, the final settlement report of the enterprise in the previous two years. The bank should also coordinate with the state notary office, becoming a unit that can regularly transact with the notary to help the bank certify related legal documents quickly, at low cost, with high accuracy.
3.2.2.3. Improving the quality of human resources
Human is the most important factor in the business activities of the bank, it directly affects the quality of service provided by the bank. To improve the quality of credit activities, it is necessary to strengthen and improve the professional qualifications of credit officers.
Credit officers in general and managers directly operating operations
Credit in particular must have:
+ Firm ideological stance with the goal of developing a multi-sector commodity economy according to a market mechanism with state management according to the law.
socialist orientation. Each cadre and employee must be an example of revolutionary ethics and high sense of discipline because the Bank mobilizes deposits for lending, any loss or risk causes damage to state and people's assets and affects the country's economic and political system. While the life of the Bank's cadres and employees is still low and they always have to deal with money, if they do not have revolutionary ethics, they will easily be tempted by material things leading to negative and wrongful behavior.
+ Have good professional knowledge, quickly grasp the policies of the State Bank of Vietnam as well as the Party and State. Know how to apply creatively and flexibly to each assigned position.
+ In addition to the standards that each credit officer must have as above, depending on the functions and tasks required of each position in credit activities, there are separate appropriate standards.
To improve the quality of credit officers, the Branch needs to implement a number of
following measures:
+ Organize recruitment exams fairly, seriously, objectively, select capable people, dedicated to the profession, prioritize experienced people.
+ Continue to improve the qualifications of credit officers, strengthen training and retraining so that credit officers have sufficient expertise and knowledge of market economy. Encourage officers to study, conduct research, and improve their qualifications domestically and abroad.
+ Branches need to have a clear reward and punishment system, linking benefits with operational efficiency to enhance the responsibility of credit officers in finding new customers, expanding credit as well as reducing overdue debt, bad debt...
+Arrange and use the credit staff in accordance with the requirements of each job position. Clearly define the legal responsibilities of each job position to ensure that rights are associated with responsibilities.
+ Classify credit officers to assign responsibility for each customer group to suit the management level of the credit officers to achieve high efficiency and close customer management.
+ Organize more frequent professional exchange sessions so that credit officers can learn from each other, assign old officers to mentor new officers, and tidy up the workplace to make it neat and clean.
+ Continue to improve the style of civilized, polite and dedicated service to customers.
goods, raise the sense of responsibility of business staff.
+ Training staff with professional expertise and good computer skills to meet the requirements of new technology.
+ Continue to thoroughly assign to each officer to enhance the officer's responsibility in credit work such as credit growth, risk reduction, customer growth, overdue debt interest collection, risky debt, focusing on credit expansion with credit quality improvement. Link the results achieved by credit officers to monthly salary payment, based on the results achieved by each credit officer to pay salary according to the results achieved in terms of targets.
+ Every month, the department leader bases on the work results to have a basis.
staff assessment classification
3.2.2.4. Strengthen the inspection of information on business operations of enterprises and promote risk prevention.
The main activity of a Bank is Business, which means that each Bank must take responsibility for its own business activities so that it always achieves the ultimate goal of ensuring business safety and profitability. However, to ensure profitability in business activities, the Bank must first ensure capital safety in business activities, but avoiding risks is very difficult.
In a market economy, businesses are always in a competitive process. Businesses continue to exist and develop, or will fall into a prolonged deadlock or bankruptcy.
When borrowing capital, businesses only provide a minimal amount of information, not completely accurate, subjective because they do not want to publicize their business activities and secrets, forcing data on financial situation, production and business to be suitable to easily borrow capital from banks... That is why to
To avoid risks, branches need to require businesses to regularly report their financial situation. If business performance is not good, they must seek advice from the bank to find another direction to avoid the worst situation.
Payment risk is one of the major risks of banks, so lending to ensure the payment ability of enterprises and capital recovery, banks should lend properly, fully and promptly to avoid widespread lending until capital cannot be recovered. Branches must consider carefully before approving loans, especially for medium- and long-term lending projects. This action of the branch will ensure that the production and business process of the enterprise takes place normally, at the same time, the branch also avoids possible risks and can collect both principal and interest.
3.2.3. Recommendations
Credit activities are activities that have many potential risks. The consequences of risks not only cause damage to the Bank itself but also affect depositors, affect the safety of the entire Banking system as well as the entire economy. Preventing and limiting credit risks is not only the responsibility of the Banking sector but also requires the coordination of the State and related ministries.
3.2.3.1. Recommendations to the State
In recent times, the legal environment for lending activities has been completed, fully transparent, strict and consistent with international practices, creating many favorable conditions for credit activities of commercial banks. However, to continue to improve further, the State needs to:
- Perfecting the legal environment and operating environment for banks and enterprises. In the credit relationship between banks and economic organizations, they are affected by many factors. In addition to the Banking Law, the State needs to have clear legal documents such as: Domestic Investment Law, Insurance Law, etc. The promulgation of the above laws ensures that credit relationships are based on a solid foundation, ensuring the safety of bank operations. In addition, there needs to be a synchronization and conformity of the legal system to create a legal corridor.
for banks and businesses to operate stably, on the other hand, ensuring safety.
safe and effective for banking credit activities.
- The state needs to build stable economic policies to avoid causing sudden changes.
Changes in the economy cause business risks for enterprises and banks.
- The State needs to stabilize the macro environment of the economy. Sectoral planning, sectoral and regional development orientations need to be specifically developed, ensuring scientific, effective and stable nature. Policies on incentives and restrictions for import and export activities need to be made public. Stabilizing the market, stabilizing prices, and maintaining a reasonable inflation rate must be considered a regular task. Adjusting interest rates to suit the socio-economic situation is necessary but should not be done too many times a year, affecting the psychology of depositors, making it difficult to mobilize long-term capital, and directly affecting lending activities. This is a condition to stabilize the value of money, thereby encouraging savings, investment, and production. On that basis, ensuring the bank's ability to recover capital.
3.2.3.2. Recommendations to the State Bank of Vietnam
- Perfecting and creating a legal environment as well as policies
of the State to ensure credit activities
It is necessary to improve the legal system because currently, our country still has overlapping documents but still creates loopholes for criminals to take advantage of to do wrong things. Therefore, a synchronous and healthy legal environment will create a safe corridor for credit activities.
Unified regulations among credit institutions on customer management standards: legal status, financial capacity, loan collateral, customer reputation, production and business capacity, and customer business environment.
Regulate the system of credit quality assessment indicators to have a basis for assessing the credit quality situation of credit institutions. The system of indicators includes: capital mobilization, lending, risk resistance, customer quality, credit efficiency.
- Good use of monetary tools
Although the hard times have passed, in the post-crisis period
In this context, the banking industry still has to put the task of controlling inflation first.