(Tiểu luận) tiểu luận môn rm solutions to enhance effectiveness in credit risk management of commercial banks in vietnam

Bộ tài Học viện tài Viện đào tạo quốc tế IIFE - TIỂU LUẬN MÔN RM SOLUTIONS TO ENHANCE EFFECTIVENESS IN CREDIT RISK MANAGEMENT OF COMMERCIAL BANKS IN VIETNAM Người thực hiện: Nguyễn Quang Hiển Lớp: DDP0501 Mã SV: DDP0501007 Giảng viên hướng dẫn: TS Lê Đình Hải & TS Lưu Quốc Đạt Hà Nội 2022 Table of contents Chapter 1: general introduction I, The urgency of the subject II, objectives of research and research tasks Chapter 2: overview of research, theoretical and practical research activities of commercial banks in vietnam credit risks in the operation of commercial banks credit risk management efficiency in commercial banks 10 Chapter 3: Research design and methods .15 3.1 Methods of data collection .15 3.2 Methods of data processing 15 3.3 Analytical methods .15 Chapter 4: Actual situation of effective credit risk management of commercial banks in Vietnam .27 4.1 Credit risk issues at commercial banks in Vietnam 27 4.2 Operational solutions 29 4.3 Current status of credit risk management in commercial banks 31 Chapter 5: Proposing solutions to improve the efficiency of credit risk management of commercial banks in Vietnam 33 5.1 Completing the organization of the credit granting apparatus and credit process 33 5.2 Building an effective credit policy .34 Chapter 1: general introduction I, The urgency of the subject Credit risk management plays an important role in securing bank credit and contributing to minimizing risks in banking operations The widening integration of the vietnamese economy into the world economy has facilitated the country' s financial activity, the banking market has many sắc, marking the new development of the vietnamese banking system However, with the characteristic of a sensitive business area, the influence of many direct and indirect factors, banking risk is inevitable and potentially a serious risk of affecting the sustainable development of the bank, the financial market, and the economy in general However, today' s credit risk management work in vietnam' s commercial banks remains khe, the maximum efficiency in reducing credit risk Because credit risk management plays an important role in securing bank credit and contributing to reducing risks in banking operations “SOLUTIONS TO ENHANCE EFFECTIVENESS IN CREDIT RISK MANAGEMENT OF COMMERCIAL BANKS IN VIETNAM” to be able to find out, research the measures to increase the effectiveness of credit risk management in Vietnam II, objectives of research and research tasks research objectives The heading towards achieving the following research objectives: Identifying factors affecting credit risks in the commercial banking system in vietnam Proposed solutions for contributing to improving credit risk management in vietnam' s commercial banking system research tasks To achieve the objectives, the subjects of the following research tasks: · Overview of credit risk management in commercial banks · Clarify the rationale / theory of credit risk management · Analysis of factors affecting credit risks in commercial banks · Assessment of the situation in credit risk management in commercial banks in vietnam · Proposed solutions for enhancing the efficiency of commercial credit risk management in vietnam research questions Any factors affecting the increase or decrease of credit risk in commercial banks? Which measures to reduce credit risk in commercial banks in vietnam subjects and scope of study research subjects Subjects of research subject to credit risk management in commercial banks and solutions to enhancing credit risk management in vietnam 4.2.Scope of study Time range: focus on assessing the effectiveness of credit risk management in vietnamese commercial banks in the 2018 - 2020 segment and offering solutions to improve the effectiveness of credit risk management consistent with the realities of vietnamese commercial banks Space coverage: commercial banks in vietnam Content scope: credit risk management 5 contributions of subjects technically + rõ of credit risk management practices in vietnam + to clarify the factors affecting credit risk management at commercial banks in vietnam + recommendations for improving credit risk management efficiency in vietnam commercial banks practical + the meaning of the subject: Research results have implications for strategic solutions for commercial banks in the management of credit risks from which to find appropriate solutions to the problems of credit risk management and effectiveness of credit risk management At the same time the topic is more enriching than the theoretical basis and the practice of credit risk management in commercial banks, as a reference for similar research topics structure of the subject Chapter 1: general introduction Chapter 2: overview of research, theoretical and practical research activities of commercial banks in vietnam Chapter 3: design and methodology Chapter 4: effective situation of credit risk management by commercial banks in vietnam Chapter 5: propose solutions to enhancing credit risk management by commercial banks in Vietnam Chapter 2: overview of research, theoretical and practical research activities of commercial banks in vietnam credit risks in the operation of commercial banks In the market economy, providing credit is the basic economic function of the bank The risk in banks tends to focus mainly on credit portfolios This is the biggest and often occurring risk When the bank falls into serious financial state, the common cause arises from credit activities 1.1.Concept credit risk is a risk that arises in the bank' s credit, in fact, through the customer' s inability to repay debt or improperly repay the bank credit risk is also known as insolvency risk and false risk, which is the type of risk associated with bank credit You can see that credit risks have two levels: the customer is not due on time and the customer can' t repay the bank 1.2.Credit risk classification Based on the causes of risks, credit risks are divided into two types of transaction risk (transaction risk) and category risk (portfolio risk) Diagram 1: credit risk classification -Transaction risk: is a form of credit risk that causes it due to limitations in transactions and lending, customer reviews The transaction risk has three main components: +The risk risk is the risk associated with the evaluation and analysis of credit, when the bank selects effective borrowing options to make decisions for lending +The risks arising from the standards of guarantee such as the terms in the loan contract, the types of assets guaranteed, the subject guarantee, the method of ensuring and lending on the value of the collateral +Professional risks are risks related to loan management and lending activities, including the use of risk rating systems and handling of problems with problems -Category risk: is a form of credit risk that causes the cause of the bank' s lending portfolio management Category risks are divided into categories: internal risks and concentration risks +Internal risk (intrinsic risk) comes from factors, features that are specific, unique inside of each borrower or sector, economic sector It comes from the characteristics of activities or the use characteristics of borrowing customers 16 +The concentration risk (concentration risk) is the case that the bank is invested in a lot of loans for some customers, lending through many businesses operating in the same sector, a field of economic, in a certain geographical area, or a high - risk loan Credit risk forms: credit risks may occur in cases for interest and principal debts as follows: not earning the right interest on time, not fully earning profits, not earning capital on time, and not fully capital The case in which the bank accounts for different tracking items such as hanging or overdue debts When it is not collected on time, risk risks are at a low level and need to be put into suspended interest If the bank can' t collect enough interest, it will have a frozen interest item, except for the cases where such interest is reduced to the enterprise When the capital is not collected on time, the bank shall have overdue debts However, this has not yet been considered a complete loss of the bank' s loss because of some reason, the enterprise slowly pays the debt repayment and will pay after the commitment of the contract If this loan is not able to recover (for example, a bankrupt enterprise), the bank is now at a high level of credit at a high level because the debt is not likely to be recovered, except for special cases, the capital - borrowing enterprise is likely to be considered to remove the debt to the enterprise credit risk exists in many forms, which are always changing to each other, which is the last level of debt that is not able to recover When studying credit risks people often focus on risks of risks such as the actual interest rates, especially the debt arising, the frozen interest and the overdue debt are not likely to be seen as the real risk situation, which is often considered to be addressed bases for determination of credit risks classification According to article 6, article decided 493 / 2005 / qd - nhnn dated april 22, 2005, by the governor of the state bank' s 493 / 2005 / qd - nhnn on the amendment of a number of articles of 493 / 2005 / qd - nhnn issued by the governor of the state bank (qđ 18), the credit institution classification of debts into groups (qđ 18 / qd - nhnn dated april 25, 2007) of the governor of the state bank (qđ 18 / qd - nhnn dated april 25, 2007) At present, pursuant to decision no 780 / qd - nhnn dated april 23, 2012 (the state bank of vietnam), the debt - related debt - controlled debt term, the debt - extending debt extension of the customer' s credit institutions tends to be good and the debt - repayment capability shall be retained in accordance with the deadline for adjusting the debt repayment period, the debt extension shall be retained overdue debts and bad debts -Overdue debts: overdue debts are debts that a portion or whole of the principal or / or interest has expired In other words, overdue debts are non - refundable credits, not allowed and ineligible for extension To ensure strict management, the bank' s overdue debts are divided into four groups (from group to group 5) -Or bad debts (or problems with problems, bad debts, bad debts,…) are overdue debts from 91 days or more without requiring and refund.Bad debts have characteristics: customers who have failed to fulfill their debt repayment obligations with the bank' s termination of the financial situation of the customer' s financial situation and have a bad tendency to lead to the bank' s inability to recover interest and ; collateral is considered the value of non - trang In vietnam, bad debts include: overdue debts or non - payable; debts related to lawsuits, lawsuits which have been instituted but cannot be recovered, owing to the handling of assets that are not handled by the government causes credit risk The causes of credit risk vary widely, from the customer side, from the bank (subjective causes) and objective causes objective It is the non - will of customers and banks such as: natural disasters, fire ; due to the change of economic management policies, such as regional planning, … Since then, the enterprise has goodwill but still cannot pay bank debts the cause of the client It is an internal cause of each customer such as a poor financial ability, weak operating capacity, inefficient business governance system, customer' s management level leads to poor use of loans or loss, affecting solvency It may also be due to the lack of goodwill in debt repayment or by the customer deliberately causes from the bank -Bank officials are not strictly serving credit and lending conditions -Policies and procedures for non - strict loans, which have no effective risk management process, have not focused on customer analysis, credit risk classification to calculate loan conditions and solvency -The capacity to forecast, analyze and evaluate credit, detect, and handle a loan with a problem of credit officials, especially for high - level knowledge - intensive sectors leading to errors in lending decisions -Lack of information about the customer or the lack of reliable credit information, timely, accurate and accurate, before granting credit -The capacity and ethical qualities of a number of credit officers, including the supervision leaders are not enough and the management of the bank, the improper use of the bank is the cause of credit risks consequences of credit risk for banks When the credit is at risk, the bank does not collect credit capital allocated and loan interests, but the bank must pay capital and interest to the mobilized money when it is due, which causes the bank to lose balance When the debt is not collected, the turnover of the credit capital is slowed down as an inefficient business bank and may lose liquidity This reduces the trust of depositors, serious influence on bank credit for the economy Banking activities involve many individuals, enterprises, many fields in the economy So, when a bank is at risk of credit or bankruptcy, the wild sender fears and each other to withdraw money from the bank but also in other banks, making the entire banking system difficult The bankruptcy bank shall affect the production and business situation of enterprises owing no wage payment or purchase of raw materials The price of goods will be increased by this time, the purchasing power,the economy in recession credit risks can spark a financial crisis, affecting the country and possibly the whole area credit risk management efficiency in commercial banks credit risk management 1 concept Credit risk management is the process of building and implementing strategies and policies for management and business in credit activities to achieve safe and sustainable objectives and development In which the emphasis is on enhancing the overdue debt prevention and control measures, bad debts in credit activities Thereby increasing revenue, reducing costs and enhancing the efficiency of commercial bank credit 2 objectives Planning and plan for prevention of credit risks How much credit risk can occur, in which condition, what causes, and how the consequences of the prevention of credit risk in a scientifically controlled way are intended to achieve specific objectives, the safety threshold and the acceptable extent To develop professional programs and mechanisms for control of credit risk prevention and control, and to take over 21 and responsibility for each member, to select technical and preventive measures for credit prevention and risk prevention and risk handling meaning In banking operations, when risks occur, the risks are difficult to overcome and the consequences are not easy to overcome Therefore, risk management is the focal point of the commercial banks, because the strict risk control means effective use of mobilized capital sources On the other hand, if the risk is not accepted, it is impossible to create new investment opportunities, and therefore, risk management is an essential demand in the existence of the commercial banks, the development of commercial banks should be governed by credit risks to minimize the damage, which means maximizing profits and maximizing the value of the shareholders 2 credit risk management efficiency 2 concept 10