Solutions to promote the efficiency of lending activities for individual customers at Military Commercial Joint Stock Bank

Banks lending to businesses will promote production and business, and there will be many goods. Banks lending to consumers will satisfy the demand for goods. Thus, the bank’s lending activities have contributed to regulating the supply and demand of goods and services for the economy.

Promotes money circulation and price stability

Lending activities have directly participated in the process of goods circulation and currency circulation, creating favorable conditions for the development of the economy, especially in key economic sectors in each stage of economic development. Lending activities are always under the direct control of the Government’s economic development policy, thus contributing to speeding up the cash flow process in the market economy, minimizing congestion. depositing capital in the production and business process, speeding up the turnover of capital.

The Bank creates capital mainly from mobilizing idle money in the economy through attractive flexible interest rate policy, then invests in the economy, in key projects in the government. national development policy set out by the Government. Besides, it is still guaranteed not to negatively affect the price situation and national currency circulation. On the contrary, the State uses other measures, such as issuing paper money to create capital to invest in the economy, which will cause an imbalance in circulation, in the goods-monetary relationship. inflation… As a result, it has a negative impact on the process of industrialization and modernization of the country.

Contributing to the expansion and development of foreign economic relations and international exchanges

Today, the economic development of each country is always associated with the domestic economic relationship with the world economy, the self-sufficient “closed” economy has now given way to the self-sufficient economy. “open” to develop and expand economic relations with countries around the world.

Banks lending to businesses will promote production and business, and there will be many goods. Banks lend to consumers to satisfy the demand for goods. Thus, the bank’s lending activities have contributed to regulating the supply and demand of goods and services for the economy.

Promotes money circulation and price stability

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Lending activities have been directly involved in the movement of goods and

Monetary circulation facilitates economic development, especially key economic sectors in each stage of economic development. Lending activities are always under the direct control of the Government’s economic development policy, thus contributing to speeding up the cash flow process in the market economy, minimizing congestion. depositing capital in the production and business process, speeding up the turnover of capital.

The Bank creates capital mainly from mobilizing idle money in the economy through attractive flexible interest rate policy, then invests in the economy, in key projects in the government. national development policy set out by the Government. Besides, it is still guaranteed not to negatively affect the price situation and national currency circulation. On the contrary, the State uses other measures, such as issuing paper money to create capital to invest in the economy, which will cause an imbalance in circulation, in the goods-monetary relationship. increasing inflation The result is a negative impact on the process of industrialization and modernization of the country.

Contributing to the expansion and development of foreign economic relations and exchanges international

Today, the economic development of each country is always linked to economic relations in the country

In the domestic economy with the world economy, the former self-sufficient “closed” economy has now given way to a developed “open” economy, expanding economic relations with countries around the world.

A country to be called developed must have a stable political economy, has a position in the international market, has a large amount of capital in which foreign currency reserves are very important. Lending activities have become one of the means of connecting the economies of countries with each other through international lending activities such as loans between governments, between organizations and individuals with the Government, between individuals and individuals… The growing development in foreign trade activities and the increasing number of members participating in the activities make the need for financial activities more and more necessary. Therefore, the creation of financial facilitation is an effective competitive tool besides other competitive factors such as price, quality of products and services, etc., has gone out of scope. of a country to the world, has the effect of promoting international production, forming a regional and world market economy, creating a new development in cooperation and competition. between countries. Thus, payment methods will also be more diversified through SWIFT network payment, LC payment… each payment method requires a suitable loan form and ensures it works safely and effective. The efficiency of foreign trade lending activities is the basis for creating trust for customers in commerce, facilitating the circulation of goods, winning in the payment competition will lead to victory in all competitions. other foreign trade activities.

1.2. Lending activities for individual customers

1.2.1. The concept of lending activities for individual customers

Lending to individual customers (Science and Technology) is a form of lending that banks temporarily transfer the right to use capital to customers who are individuals or households for consumption and small business activities of such individuals and households with certain conditions agreed in the contract. on the principle of full repayment of both principal and interest.

In the past, banks were less interested in individual customers, because loans were often very small, making debt collection quite difficult. Although lending activities to

HCN is relatively new in Vietnam but has great potential for development. The big advantage is the large market size with a population of about 90 million people. Most of them have young age, income, modern lifestyle and big shopping demand. Lending activities for HCN are mainly to help finance students’ studies or to buy cars, houses, household equipment, building materials for repair and modernization of houses, cover hospital fees, investment in household production and business and other personal expenses. Therefore, banks are increasingly focusing on this customer.

1.2.2. Features of lending activities for individual customers

The scientific and technological objects of this activity include individuals and households with needs demand for loans used for the purposes of living, consuming or serving the production and business of that individual or household. Different from businesses and organizations economic (TCKT), HCN usually has a large quantity, the demand for loans is very diverse but

Normally, the borrowing needs of each HCN are irregular and influenced by influenced by the economic, cultural and social environment.

Depending on the purpose of the loan and the type of loan, the loans of Science and technology has a term: short-term, medium-term or long-term.

Normally, the size of each loan of HCN is usually smaller than that of enterprises or financial institutions. However, the number of loans of science and technology in commercial banks is often large. In commercial banks operating in the direction of retail banking, the number of loans of science and technology is very large and therefore the total size of HCN loans usually accounts for a large proportion of the total outstanding loans of the bank.

Because HCN loans are often small in size, the number of these loans is often very large, so banks often have to spend a lot of money in customer development, appraisal, approval and loan management. Therefore, the cost per VND of HCN loans is usually higher than that of corporate customers (Corporate customers).

Interest rates of HCN loans are usually higher than other loans of commercial banks. The reason is that the costs of science and technology loans are large, and science and technology loans have a high level of risk.

HCN loans are usually the riskiest for the bank. This is because HCN’s financial situation often changes rapidly depending on their work status and health. In production and business activities, individuals and households often have poor management skills, lack of experience, outdated science and technology – and limited ability to compete in the market. Therefore, the bank will face many risks when the borrower is unemployed, has an accident or goes bankrupt Therefore, loans with collateral (Secured Assets) or guaranteed by a third party will increase more reliability, and at the same time help the bank reduce risks than loans without special assets. In addition, banks may face currency risks when lending to customers in foreign currencies. Therefore, science and technology loans need to be monitored more strictly.

1.2.3. The role of individual customer lending activities

For individual customers

For consumer lending: This activity brings great benefits to consumers

consumption by satisfying their spending needs, satisfying their need to enjoy the best quality goods to improve their lives. Reality shows that there are many natural, essential and important needs in life of individuals and households. For example, the need for shopping, home repair, buy home appliances,…

For production and business loans: This means that customers will have capital to expand their production and business activities or implement new production and business plans without taking much time to borrow from relatives. acquaintances,… but sometimes they cannot borrow the necessary amount of capital. When customers come to the bank for a loan, they will have a variety of products to choose from with the right loan values and repayment times that match their income.

For the bank

Science and technology lending helps banks improve capital efficiency. Although still

There are many risks due to the relatively high interest rates applied to HCN loans, which makes science and technology lending activities with a large profit margin.

Promoting the efficiency of science and technology lending activities helps the bank not only expand its lending customers, effectively utilize mobilized capital, but also diversify banking products and services. Normally, when lending to science and technology, banks are often forced to transfer money or use salary payments through bank accounts. Since then, the bank has increased its competitive strength, and at the same time created its own attractive features for its services.

For economy

For S&Ts who have consumer loans, this loan will help them get more stable life, more motivated to work, save. As for science and technology customers with the purpose of borrowing for production and business, this loan helps businesses of the customer to increase their production scale and develop their own business activities. This has made the whole process of production, exchange and distribution of consumption take place quickly and effectively, making the economy grow. Thus, promoting the efficiency of science and technology lending activities helps to fulfill the important role of commercial banks in the policy of economic renewal of the country, creating conditions to improve the people’s quality of life and contributing to promoting economic growth. economic growth.

1.2.4. Types of loans for individual customers

Based on the purpose of using the loan, science and technology loans include two types:

form: for consumption and loans for production and business.

1.2.4.1. Consumer loans

Consumer loans are loans to meet the consumption needs of individuals and households. The demand for loans is rich because the borrowers are very diverse and the purpose of using the capital is also very flexible.

However, consumer loans are generally riskier than domestic loans production and business sectors, so the interest rate of consumer loans is usually higher than lending rates in these areas.

The term of consumer loans is quite diverse, both short-term, medium-term and long-term.

1.2.4.2. Loans for production and business

Production and business loans are loans for the purpose of supplementing capital for production, business, investment of individuals and households: supplementing working capital, purchasing machinery and equipment, investing in facilities. for production and business activities, business investment securities business

For the above two types of loans, the loan term can be short-term (loan term of less than 12 months), medium-term (loan term from 12 months to 60 months) and long-term (loan term of less than 12 months). from 60 months or more); Loan methods can be: one-time loan, installment loan, overdraft, especially for regular loan needs to supplement working capital in production and business activities, the limit loan method Credit is widely used.

Lending in installments: A lending method where each time the customer and the bank carry out the procedures (the customer makes a loan plan, the bank approves, ) and signs a credit contract. Lending in installments is a form of loan in installments, when customers have a need to borrow for a specific purpose of using capital such as paying for goods and other production and business expenses.

Installment loan: When taking out a loan, the customer and the bank agree to determine the amount of loan interest to be paid plus the principal amount to be divided to repay over many terms during the loan period.

Loan under overdraft limit: A type of credit through which the bank allows customers to use more than the amount they have deposited with the bank on the current account with a certain amount and term. .

Lending by credit line: A lending method where the bank and the customer agree to determine a credit line to maintain for a certain period of time. Credit limit is the maximum loan balance that is maintained for a certain period of time, agreed upon by the bank and the customer in the credit contract.

Loan safety measures are an important factor in the bank’s loan approval process with customers, currently banks consider lending to customers.

goods based on two forms:

Secured loans: Loans secured by assets owned by the borrower or by a third party. Special assets for loan can be: deposit account balance, passbook, goods, machinery and equipment, real estate product…