Thesis - Improving the performance of capital mobilization at vietnam bank for agriculture and rural development - hoan kiem branch

This research discusses the details of mobilizing capital Vietnam Bank for Agriculture and rural development in. The purpose of this was identify the “best” way, accessing the issues in the theory and practice, this subject uses the concepts of mobilizing capital, and then combines with statistics, analysis, synthesis, and comparison method in Vietnam Bank for Agriculture and Rural Development in order to clarify the matters. It is hoped that these findings will illustrate the strengths, weaknesses, and current issues of each situation which in-turn will leads to improvements in future mobilizing capital in Hoan Kiem branch.

I would like to express my profound gratefulness to my supervisor Prof Ta Loi, who has dedicatedly guide, help and encourage me during the time of making this thesis.

I also would like to give my thanks to the lecturers and tutors in National Economics University generally and Advanced Program particularly who have conveyed valuable knowledge to me during the last school years.

I sincerely thank all of the staffs in Vietnam Bank for Agriculture and Rural development (VBARD) - Hoan Kiem Branch who gave me favorable conditions, helps and guidance in the days of internship at the bank.

Student Tran Thi Nhung.

TABLE OF CONTENTS

ACKNOWLEDGEMENT

TABLE OF CONTENTS

ABBREVIATION

LIST OF TABLES

LIST OF DIAGRAMS

EXECUTIVE SUMMARY

INTRODUCTION

APPENDIX

CHAPTER 1: OVERVIEW OF COMMERCIAL BANKS AND MOBILIZING

CAPITAL IN THE BANKS 1

1 Commercial banks - the role and functions in the economy 1

1.1 Over view of Commercial 1

1.1.1 History and development of commercial banks 1

1.1.2 Functions of commercial banks 3

1.1.3 The role of banks in the economy 5

1.1.4 The basic operations of commercial banks 6

1.2 Capital and operations of commercial banks to raise capital 8

1.2.1 Capital in the banks 8

1.2.2 Rising capital activities in Commercial Banks 10

1.2.3 Classification forms of raising capital in commercial banks 11

1.2.4 Some form of raising capital base of banks 14

1.2.5 The effect of raising capital in the bank 16

1.2.6 Factors affecting the mobilization of capital in the banks 16

1.3 Organizing methods to mobilize capital 18

CHAPTER 2: CURRENT SITUATION OF WORKING CAPITAL MOBILIZATION VBARD HOAN KIEM BRANCH 19

2.1 The formation and development 19

2.2 Functioning of Agribank - Hoan Kiem Branch 22

2.3 The organizational structure of the branch: 23

2.2 Overview of the operations of Agribank - Hoan Kiem branch 25

2.2.1 The major activities of Agribank - Hoan Kiem Branch 25

2.2.2 The status of raising capital in Agribank - Hoan Kiem Branch 27

2.2.3 Assessing the work of raising capital in the Vietnam BARD - Hoan Kiem Branch 41

CHAPTER 3: SOLLUTION TO IMPROVE MOBILIZING CAPITAL IN VBARD – HOAN KIEM BRANCH 43

3.1 Activities Orientation in the future of Agribank - Hoan Kiem Branch 43

3.1.1Orientation in the work of raising capital 43

3.1.2 Orientation in the use of capital 43

3.1.3 Some targets expected to be achieved in the coming years 44

3.2 Solutions to enhance capital mobilization of the VBARD - Hoan Kiem Branch 44

3.2.1 Solution to the bank 44

3.2.2 Solution from expect of government 47

3.2.3 Some proposals for BARD Vietnam 49

CONCLUSION 51

VBARD Vietnam Bank for Agriculture and Rural development

LIST OF TABLES

Table 1.1 - Simplified balance sheet 8

Table 2.1 – Structure of capital Mobilizing 31

Table 2.3 - Deposits from Business organizations 32

Table 2.4 – Structure deposit of credit organizations 34

Table 2.5 - Structure source of deposit from Credit Institutions 36

Table 2.6 – Structure of bill of exchange 37

Table 2.7 – the cost of mobilizing capital 39

Table 2.9 – Balance of mobilizing capital for medium and long term loan 40

LIST OF DIAGRAMS

Diagram 2.1 - Organizational structure 39Diagram 2.2 - Organizational structure of the branch 42Diagram 2.3 - Structure of Capital mobilizing 49

EXECUTIVE SUMMARY

This research discusses the details of mobilizing capital Vietnam Bank forAgriculture and rural development in The purpose of this was identify the “best”way, accessing the issues in the theory and practice, this subject uses the concepts

of mobilizing capital, and then combines with statistics, analysis, synthesis, andcomparison method in Vietnam Bank for Agriculture and Rural Development inorder to clarify the matters It is hoped that these findings will illustrate thestrengths, weaknesses, and current issues of each situation which in-turn will leads

to improvements in future mobilizing capital in Hoan Kiem branch

The methods utilized in this research include The time period for thisresearch is from 2007 to 2010 ( expected 2010) Preliminary results of this researchindicate that a good method to mobilizing capital depending on the method ofanalysis demand of customers, the experience of deposits officers, the regulations ofthe commercial banks and SBV, the availability of public information, and thestrength of information system Finally, it is recommended that content ofmobilizing capital should be updated and adjusted to bring the most effective andefficient It is also recommended that focused human resources be highlyconcerned; training and recruitment are necessary to improve

1.Rationale

Banks play an important role in the international economic integration,especially in the period of business Industrialization - Modernization of the countryand the transformation of the economy from a backward agricultural economy to amodern intensive Through the banking system, promoting the mobilization ofcapital is an essential requirement to meet the needs of capital for the economy toensure the effectiveness and safety in business and contributing to Vietnam stabilitymonetary

Most of the banks own capital resources can not meet the needs of bankingactivities Because of this, banks must seek to expand their capital To be able toraise capital and provide a more effective way, the bank's capital raising should beconsidered in terms of quality

Through the process of internship at the Vietnam Bank for Agriculture andRural development (VBARD) - Hoan Kiem Branch, through practical activitiesraise capital, I realize that this is an important issue that Vietnam's banking system

in general, VBARD - Hoan Kiem Branch in particular are very interested Besidesthese successes have been achieved, there are other limitations exist in this HoanKiem branches need to overcome to achieve better results So I bravely selected the

thesis topic: " Improving the performance of capital mobilization at Vietnam

Bank for Agriculture and Rural Development - Hoan Kiem Branch" to

contribute a small part in improving efficiency in the work of raising capital in thebranch

My research is a broad complex so errors are inevitable I look forward all the comments from teachers, people who are interested in my report

2 Research questions:

 How the work mobilizing capital in Vietnam Bank of Agriculture andRural Development Hoan Kiem branch is going on?

 What are the problem exist on the mobilizing capital ?

 How can we solve that problems?

3 Research objectives

- To further clarify the basic theories of economic effciency of

mobilizing capital field, especially during the period ofglobalization and international integration

- To assess the reality of mobilizing capital in the changing of

economic during the international and economic development ofVietnam

- Suggest solutions to improve solutions and recommendations to

promote mobilizing capital activities in Agriculture and RuralDevelopment Hoan Kiem branch

4 Research methodology

Accessing the issues in the theory and practice, this subject uses the concepts

of mobilizing capital, and then combines with statistics, analysis, synthesis, andcomparison method in Vietnam Bank for Agriculture and Rural Development inorder to clarify the matters

5 Research scope

Scope of research: the real situation and performance improvements of

mobilizing capital in VBARD Hoan Kiem branch from 2007 to 2010 (expected).

6 Research structure

The thesis is constituted by three parts: Introduction, Body, and Conclusion

In which the body include three chapters:

Chapter 1: The basics definition of commercial banks and mobilizing capital in the banks.

Chapter 2: Status of the work of raising capital in the VBARD - Hoan Kiem Branch.

Chapter 3: Solutions to motivate capital mobilization at the VBARD - Hoan Kiem Branch.

CHAPTER 1: OVERVIEW OF COMMERCIAL BANKS AND

MOBILIZING CAPITAL IN THE BANKS

1 Commercial banks - the role and functions in the economy.

1.1 Over view of Commercial

1.1.1 History and development of commercial banks.

1.1.1.1 History to form banks

The first bank is bank of gold craftsmen, of usury, the lending to individualsare mainly rich people as officials, landowners to serve consumers Form of loansmostly for customers spending more than the amount deposited in the bank, this is aform of loans carry more risk Due to profit from lending is very high, many bankshad abused the dominance of deposit certificates (instead of gold or silvercirculation) certificates of deposit issued to control lending This situation hascaused many banks to take place solvency and bankruptcy

This collapse makes it difficult for the payment activities, adversely affecttrading activity Moreover, high interest rates, so the merchants can not use theseloans Under these circumstances, many merchant banks have establishedthemselves as commercial banks

1.1.1.2 History of development.

CBs are formed from the movement of commercial capitalism Its conducted thebusiness of traditional banks such as mobilizing capital, taking deposits, payments,household storage, household lending

Major activities of commercial banks serve the merchants loans as commercialpaper discount form This is a short-term loans based on the movement of goodswith a lower interest rate profits generated by the use of loans To ensure safety, the

initial commercial banks not lending to consumers, not the medium and long termlending, not lending to the State.

The bankruptcy of many banks has caused big losses to depositors as the causeleading to the formation of bank deposits Bank loans are not made only kept forpayment of household expenses Simultaneously in each of the specific historicalconditions have formed a variety of other banks such as savings banks, developmentbanks, investment banks, central banks (State Bank) create a banking system.Along with economic and technology development, banking activity has madesteady and rapid From private banks, through the process of capital accumulationand concentration in banking has led to the formation of joint stock banks Manytraditional business remain beside the new business is growing CBs from just short-term loan is extended primarily for medium and long term The form ofmobilization is also very rich The different types of deposits are taken to meet themaximum demand of customers Besides the form of mobilizing deposits, bankshave extended the loan forms, such as central bank lending, lending to other banks.Banking technology are helping to change the basic operation of the bank.Electronic payments are replacing manual payment speed, convenience and safety

in payment, at home are creating facilities for the growing population

Development process of the bank not only increase the number of banks butalso increased the size of each bank This process is creating a tightly relationship,the growing interdependence between banks The activities of transnational banksand multinational has promoted the formation of associations, affiliates of banks tocreate a general policy or compatible to common control, to connect and createuniformity in the administration and operation of the banking system in eachcountry, regional and international

Also has a lot of crisis and panic banks in each country, region and world,causing great losses to the economy and political instability It can be said that thecrisis is also an indispensable step in the process of development banks

1.1.2 Functions of commercial banks.

There are two types of relation ship between banks with individuals andorganizations on the completely independent Inevitable that the money will betransferred from the group of individuals and organizations in spending surplusindividuals and groups to organize a temporary deficit spending if both mutualbenefits

However, direct contacts are more limited due to the inappropriate scale,time, space, etc This made it difficult to develop direct relations and theintermediate conditions arise Finance

Financial intermediaries have increased income for savings, from whichencourage savings and reduce the cost of credit for investment (income toinvestors), thereby encouraging investment

Financial intermediaries have a collection of savers and investors, so to solvethe problems of the direct credit A contribution of the bank is willing to acceptmore risky loans while issuing securities and less risk depositors Actually banksengage in the business risks, banks also satisfy the liquidity of many customers

For the prosperity development of banks and have another reason is theability to evaluate information The uneven distribution of information andinformation analysis capacity is called state of "asymmetric information" reducesthe effectiveness of the market but make a profit for the bank, where professional

experience and assessment of financial instruments and have the ability to choosethe tools with risk factors - the most attractive profit.

1.1.2.2Creating means of payment.

Money - gold has an important function as a means of payment The bank did notmake the coins The bank gold craftsmen create commissary note when issuing debtwith customers Commissary note issued by banks with strong points has becomewidespread means of payment is widely accepted

In the development conditions of payment through bank, the customernoticed if they have balances on deposit accounts they can pay to get paid for goodsand services as required

The whole banking system also facilitates payment when the deposit wasextended from bank to bank on the basis of other loans When customers use a bankloan to pay it will create revenues (to increase deposit balances) of another customer

in a different bank from which to create new loans While no individual bank canlend greater excess reserves, the whole banking system can create the volume ofdeposits (make payment) multiplier through lending operations (credit creation)

1.1.2.3 Mediate settlement.

Bank became the biggest intermediary payments in most countries Onbehalf of customers, banks make payments on the value of goods and services Forthe payment become convenience and cost savings, banks offer customers multipleforms of payment such as payment by check, payment, collection, the cards .provide payment electronic networks, connections funds to each other, andproviding cash when the customer needs Commercial banks also made clearingthrough the central bank together or through the payment center Many forms ofpayment are made uniformity to contribute normalized in the payment not only

between banks within a country but also between banks worldwide Theinternational payment center was set to increase the efficiency of payment throughbank, the bank turned into an important center of settlement and effective, efficientservice for the global economy.

1.1.3 The role of banks in the economy.

1.1.3.1 The capital needs of the economy.

Within both national and international, Capital is not only serves as a factorinvolved in the production of each single economic entity, but also affect thebetween multi-dimensional complex relationship Therefore capital affects the

Vietnam is a developing economy now a day, especially in the beginningstages of industrialization - modernization, capital is one of the many problemsmentioned in the economy The enhanced search and mobilize capital from differentsources is an indispensable service to the system of industrialization –modernization

If we want to mobilize capital, we will have to identify the source of capital

in the economy Because it is closely related to the cost of exploitation and efficientuse of capital has been mobilized The domestic capital can be exploited through thefollowing sources:

- Capital grant directly from the budget

- Capital through the issuance of financial instruments

- The capital from the business organization

1.1.3.2 Providing funds and services by commercial banks for the economy.

Capital raised through the large number of banks have been used to makelending, investment, guarantee, etc It meet the needs of capital for economicactivities in all forms and scale different duration Thus in the economy, banks play

a role as a bridge between those who have capital to those who wish to use thecapital Banking activities developed benefit to both parties Who need capital will

be used at the limit in number and desired time at a determined interest rate So itcan respond quickly to the capital for their business plans, cost savings for capitalappropriate Persons with temporary idle funds deposited in banks will get a profitfrom idle capital Although interest rate is not as high as the direct investor, but itoffers stability and less risk

Based on the capital have been mobilizing, the bank also play as anintermediary between the payment of economic units, organizations, etc to make therelationships in the economy becomes more simple, more convenient and fastersignificantly to the economy by reduce the use of direct operating cash Thus, timeand reduce transaction costs significantly, enabling the units and organizationsimprove performance, cost savings and business profits are rising

Today, the bank offers many services to meet the needs of large clients such

as preservation of assets, entrusted The type of banking service has beendeveloped to satisfy the increasing the demands of economic development in eachregion, countries in specific terms

In the course of operations, commercial banks implement monetary policythrough the observance of regulations on interest rates, reserves, limit consumer contributing to the maintenance of monetary stability in the country, promote thegrowth economic growth and development of the country

1.1.4 The basic operations of commercial banks.

Now a day scientific and technological develop continuously As the resultcurrent service activities of banks increasingly diverse flowing the requirements of

the economy However, the bank maintains three traditional activities are acceptingdeposits, lending and payment.

1.1.4.1 Professional fund raising.

This is a traditional activity, essentially all commercial banks to generatefunds to carry out other activities Mobilize capital from various sources, by manydifferent methods Banks may use funds raised to repay principal and interest shall,

at the same time to ensure a required reserve ratio as prescribed

1.1 4.2 Lending and investment.

This is the banks use the capital raised to take on the business objects by the borrower, or by bank proactively

1.1.4.3 Payment of professional intermediaries.

Bank holding it between the customer through such forms as the moneyorders, payment, check

1.2 Capital and operations of commercial banks to raise capital.

1.2.1 Capital in the banks.

Table 1.1 - simplified balance sheet

1.2.1.1 The charter capital of commercial banks

This is recorded as capital allows banks to be established This could be theamount of capital to equity (for joint bank) is formed from the capital contributed

by shareholders through the purchase process and issue shares from the Governmentbudget (for state owner banks)

There are also additional capital fund: This fund was formed by theseparation of annual profits in proportion to the bank to implement regulations toensure safe operation of banks and financial implementation of the current financialregime

1.2.1.2 Equity capital.

Of the total capital of commercial banks, equity capital is stable Equitycapital of commercial banks include amounts undistributed profits, value added bythe difference in asset revaluation, other funds may be used can be considered aspart of the bank's own capital

Own capital is the legal conditions required to establish a bank at the sametime it is also the basis for banks to conduct business and raise capital for loans

1.2.1.3 Capital raised from the outside.

Banks raise capital from outside with the following forms:

 Deposits of residents, the local economic organizations

Issuance of debt instruments such as promissory notes and bonds

 Loans: the central bank can borrow, the other domestic and foreign banks onthe inter bank market, loans and other financial institutions

 Capital in the payment activities: these are temporarily idle funds in thebank performing the payment intermediary for its customers

In additional banks can also use some other working capital accounts when theaccount that undue payments

1.2.1.4 Capital investment trust.

This is the source of funding, the investment trust of the Government,organizations and individuals in national and international as portfolio investmentinto the economy in the form of money or capital in the production line at projectswith the aim of own This source was used to satisfy the bank for the economybecause it costless Capital investment trust is the major sources which banksalways want to develop the work of raising capital in the banks

Capital of the banks varied but always mobilized a large proportion It is akey component and a basic service that every bank must comply.

Demand for capital in the bank to use very large compared with its owncapital and can borrow capital from banks Own capital will help banks qualify forbusiness loans have also supported the temporary nature of the bank to meet capitalshortages Really want to play a role as a financial intermediary, a currency tradinginstitutions, the bank can not raise capital to conduct

Sources of capital that banks are determined to mobilize the capacitypayment as well as the scale of professional qualifications, technical means thebank It's a great influence on competitiveness, position and prestige of the bank onthe market In fact, a strong bank in raising capital will have many advantages in thedevelopment of services, expand markets, promote business activities So each bankwill need regular attention to the work of raising capital to meet businessrequirements for banking and capital needs of the economy

1.2.2 Rising capital activities in Commercial Banks

Commercial Banks have variety of capital, but deposit was mobilized a largeproportion It is a key component and a basic service that every bank must comply

Demand for capital in the bank is very necessary to use compared with itsown capital and borrow capital Own capital will help banks meet the qualify forbusiness And loans support the temporary nature of the bank to meet capitalshortages Really want to play a role as a financial intermediary, a currency tradinginstitutions, the bank can not proceed without raising capital

Sources of capital that banks are determined to mobilize the capacitypayment as well as the scale of professional qualifications, means of technology ofbanks It's a great influence on competitiveness, position and prestige of the bank onthe market In fact, a strong bank in raising capital will have many advantages in thedevelopment of services, expand markets, promote business activities So each bank

will need regular attention to the work of raising capital to meet businessrequirements for banking and capital needs for the economy.

1.2.3 Classification forms of raising capital in commercial banks

1.2.3.1 According to object raising capital.

Banks can proceed to mobilize capital from various sources, including thedivision if the object has the following forms:

- Mobilization of the population

- Mobilization of the local economic organizations

- Mobilizing from other banks

- Mobilization of the Central Bank

In the forms above, on the mobilization of the population and source fromeconomic organizations are regularly fundamental nature source, long-term andstability Two sources above also account for a small percentage, effective timelysupport in conditions when banks encounter temporary difficulties in capital

1.2.3.2 According to the method of raising capital.

- Regularly mobilizing capital:

+ Current accounts, deposits held by households and business organizations.+ Savings deposits and term

+ Issuance of debt instruments such as promissory notes, bonds

- Direct Loans: to promptly meet the demand for capital, banks must accept a higher interest rate to be used through direct borrowing from other banks through the inter bank market

- Central Bank Loans:

In the banking system, central bank acting as last lender for commercial banks to borrow under the following forms:

+ Re-discount vouchers

+ Lending additional short-term credit

+ Additional payment loan store

The central bank borrows but not subject to high interest rates but are often

accompanied by the constraints of due process

1.2.3.3 In term of time.

- Mobilization of short-term: usually the savings deposit or direct loans forless than a year in which direct loans short term only used in cases in addition to thelack temporary loss of capital for loan or payment

- Mobilization of long and medium term: usually mobilized with a term ofover one year with the release of long-term debt or long-term loans directly fromfinancial institutions, other credit The long-term loans directly to meet the demandfor long-term capital of the bank in terms of resource mobilization, such as regulardeposits, promissory notes, bonds, etc which can’t make large scale amount ofcapital needed

1.2.3.4 In term of Currency.

- Mobilization of domestic currency: Capital is a source of abundant local currencythat banks can exploit from the flow of domestic income It always takes a largeshare in total capital, and this is also the form of raising capital base of banks allover the world

- Raising capital in foreign currency funds in the form of foreign currency (usuallythe hard currency such as USD, EUR ) is also essential in the business of banking,

in relation to import and export financing, payment international investment on theinternational market

1.2.3.5 According to the method of payment.

* According to the time of interest payments.

- Interest paid depositors end of each period: this is a common form used in depositmobilization Depositors are paid interest only at the end of each

prescribed period or when the deposit was due

- Interest paid before each public deposit: this is the form of interest paid on the firstday of a new term deposit

* According to the number of times interest payments.

- Interest paid once time: the interest paid by the nominal interest rate multiplied by the number of deposits and the field once when the deposit matures

- Interest paid many times: the depositors are entitled to an interest rate fixed

periodically by the length of each period multiplied by the interest rate

* The calculation of interest.

- Calculation of commonly used: the interest is entitled to the deposit interest rate time Principal repayment by the initial deposit

- Calculation of discount rate: the amount of deposits in the nominal amount of the deposit after deducting the discount deposit Discount interest by multiplying the nominal deposit interest rate discount With the same interest rate, if mobilized in

this form, the actual interest rate will be higher than in the form of mobilizing popular The discount rate used when the bank loans to other banks, state bank loans in the form of discounts or other valuable papers sell investments.

1.2.4 Some form of raising capital base of banks.

1.2.4.1 Personal deposit account.

Overall this is a source for banks to raise capital at low cost Personal depositaccount is opened by the customer account in a bank to send the idle funds to profit

or to use other means of payment such as bank checks, payment accounts Thisdeposit may have maturity or don’t have maturity, depending on the system

between banks and customers

Principal are usually non-maturity deposit in purpose to conduct customer transactions, payments through banks So banks can not pay interest or if the

amount of interest payable which is also very low

However, the use of this money make banks in disadvantage which make nature unstable because customers making deposit or withdrawing out at any time Personal deposit account also placed the bank face with liquidity risk Want to use this to mobilize resources effectively, banks need to conduct research about

spending needs and characteristics of business, revenue of customers to efficiently exploit this resource in each period

1.2.4.2 Savings deposits of residents.

Savings deposit of resident is the amount of money to spend for consumptionpurposes in the future of residential deposited in banks, and enjoy an

interest rate on savings deposits

This is a non-transaction deposits, savings accounts can not be extracted tomake the required payment as personal deposit accounts This item includes:

- Savings deposits non-maturity

This form needs to send money from customers without a clear plan in thefuture or just want to get a certain amount of money on interest payments is nowidle But because this is money not define the term, the sender can be drawn at anyarbitrary so interest rate generally low

- Savings deposits with maturity

This type of deposit is an agreement between the depositor and banks aboutamount of money, maturity, deposit interest rates It is nature defined term, it is acapital capable of high stability, banks can actively use to lend to the same period.However, the deposit interest rate is usually higher than demand deposits and termdeposit accounts and individuals Customer deposits for as long as the higherinterest rates

- Savings deposits are guaranteed value

Are savings deposits that banks commitment to customers about theconversion of the money deposited with a gold or hard currency equivalent of thatamount The purpose of this type often mobilize resources to medium and longterm, avoid the risks in the social and economic conditions change This is anattractive form by creating customer peace of mind but makes it difficult for banks

to manage the volatility of gold prices and exchange rates

-Savings deposits with purpose

This form is quite common in developed countries Customers send in a bankaccount with the intention of accruing money for a defined purpose such as buyinghouses and cars, and also be entitled to interest on deposits as other forms ofsaving This form of mobilizing medium and long term are quite effective, stablenature, and have a positive effect in supporting the purchase of vehicles for people

- Term bonds and bank bonds.

- Promissory notes

Banks issuing promissory notes in waves and make the situation on the basis

of capital and the demand for capital in the next period of the bank

Bonds are a paper receipt of debt, is a form of raising capital is quite flexible.The tool aims to raise capital in this population are highly liquid, easily converted tocash and other forms Due to the active interest of the promissory notes are oftenstable at attractive interest rates depending on the extent necessary

for the bank's capital

-Bonds

This is a paper receipt of the bank's long term debt There are many types of bonds Based on the nature of ownership and transfer of the bonds include bonds and bond registration signed Referring to the method of issuing bonds and paying interest, including discount bonds, coupon bond

But all types of bonds in the following have in common: the determination ofpar value (the price stated on the bond), the date of maturity, interest rates

announced when issuing, interest payment

1.2.5 The effect of raising capital in the bank.

The expansion of activities, expand markets, increase profitability isexpected of all commercial banks in particular and of all the banks in general Butalways the ability to perform depends on their resources The project feasible, thegood investment opportunities but if banks can not afford to fund it can not beachieved Ability of capital here is not just raising capital and other resources aresufficient to lend or not but also the quality of resources used to provide guaranteedlong-term interests of the bank or not

1.2.6 Factors affecting the mobilization of capital in the banks.

1.2.6.1 The feasibility of the project.

Investment projects are most important to base decisions on investing in, as abasis for planning of investment These projects have huge capital needs Bank'sactivities require capital Mobilize and use capital how the role and significance ofspecial importance in the business of banking

According to a survey by the authorities showed the need to build high-endprojects in Vietnam have increased sharply in recent years However, the supplymay meet demand again Before the development needs of our country, especiallywhen Vietnam becomes a WTO member, the sudden demand for capital willcontinue to rise How to meet the demand for social capital, while ensuring thebusiness is a difficult problem for the banking industry today

1.2.6.2 Domestic legal system.

State issued Investment Law, Construction Law, Land Law, Tax LawrenceAnd Government issued the Decree guiding the implementation of the Law onsimultaneously with other documents under the Act to encourage investment Onthe other hand guaranteed to attract investment in projects aimed at achieving high economic efficiency

World science and technology have significant progress, in which the

investment projects have been increasingly enhanced, particularly information technology enables rapid development operating system becomes more modern

This contributed in attracting projects capital

Reform the mechanism associated with the new management of the economy

in which business in general and in particular the banking system was givenautonomy in production and business have created internal resources as

possible Self-investment is assured

Advocates to promote the equalization not only improve the efficiency ofbusiness activities that actually makes it possible to better mobilize capital forinvestment projects.

1.3 Organizing methods to mobilize capital.

Enterprises are allowed to issue shares and shares with the public, given publicly on the stock market is capable of diversifying investments and raising capital is more favorable

This is an important factor to enhance the diversification of investment If consulting activities also have inadequate capacity, lack of uniformity, lack of technological capacity, there is no innovation to improve the standard costs, the speed and extent of diversification raising financing will be difficult to increase

Besides these factors, the international economic integration of our country isalso an important factor for us to attract foreign investment into the development ofinvestment projects We have officially joined the World Trade Organization(WTO) so Vietnam is increasingly the factor of foreign investment It makes itpossible to promote the investment projects of our country However, to turn thatpossibility into reality we need to have good mechanisms and excellent policies tocreate appeal foreign investors as domestic investor and cooperate with

each other

Within the economy, raising the quality of the high capital will mean the ability to exploit stable funding sources for economic development with low level costs Thereby maximizing the internal force for the industrialization -

modernization of the country, contributing to avoid the accumulation of capital in the bank to the economy is no longer current lack of capital

CHAPTER 2: CURRENT SITUATION OF WORKING CAPITAL

MOBILIZATION VBARD HOAN KIEM BRANCH 2.1 The formation and development.

In 1998, the Agricultural Development Bank of Vietnam was established byDecree No 53/HDBT dated 26 March, 1988 of the Council of Ministers (now theGovernment) with the reform of the financial system and the introduction ofcommercial banks in Vietnam

The Agricultural Development Bank of Vietnam was created out of the StateBank of Vietnam (SBV): from all provincial branches of SBV, Agriculture CreditDivision, funds at different provincial/district branches of SBV; specifically,VBARD was formerly the Agriculture Credit Department of SBV with personnelfrom Commercial Credit Department, Bank for Investment and Construction,Department of Accounting, and a number of functional units

On 14 November, 1990, President of the Council of Ministers (now thePrime Minister) signed Decision No 400/CT on establishment of the Vietnam Bankfor Agriculture (VBA) to replace the Agricultural Development Bank of Vietnam.The Vietnam Bank for Agriculture was by law a legal entity having universalbanking functions with major focus on agricultural sectors and rural areas, andresponsible for its own finance, operations

On 30 July, 1994, by Decision No.160/QD-NHN9, The Governor of theState Bank of Vietnam approved new innovative management system model of theVBA, on that basis, the General Director of VBA specified in writing in document

No 927/TCCB/VBA dated 16 August, 1994 which detailed as: the Vietnam Bankfor Agriculture had two levels: Advisory level and Operational level This was truly

a turning point in the organizational structure of VBA and set the foundation for

business operations of the existing Vietnam Bank for Agriculture and RuralDevelopment (VBARD).

On March 7th, 1994 pursuant to the Decree No 90/TTg of the PrimeMinister, VBA began to be organized into a State-owned Corporation with theorganizational structure consisting the Board of Directors, General Director,assisting apparatus including apparatus for internal control, subsidiaries includingdependent accounting business units, independent accounting business units, andexecutive and non-executive functions were clearly separated, in which Chairman

of Board of Directors and General Director were two separate roles

On 15 November, 1996, authorized by the Prime Minister, the Governor ofthe State Bank of Vietnam issued Decision No 280/QD-NHNN to rename theVietnam Bank for Agriculture (VBA) into Vietnam Bank for Agriculture and RuralDevelopment (VBARD)

Under the new name, VBARD is allowed to carry out commercial bankingactivities but with a focus on investment for agricultural sector and rural areas byproviding medium and long-term loans for infrastructure development, particularlyagriculture, fishery, forestry, contributing to the cause of industrialization andmodernization of agriculture and rural development

At the end of 2009, total assets of Agribank reached VND 479,000 billion,

an increase of 22% compared with 2008; total funding resources reached VND434,331 billion, and total outstanding loans to the economy reached VND 354,112billion, of which outstanding loans to agricultural and rural areas was VND 242,062billion

Diagram 2.1: Organizational structure

(source: Agribank Hoan Kiem branch )

Bank for Agriculture and Rural Development, Hoan Kiem Branchestablished by Decision No 141QD/HDQT – TCCB 28/02/2009 and No 02/NHNo-

02 on 5/01/1995 by the Board of Director of Vietnam Bank For Agriculture andRural Development

International Transaction name: Bank for Agriculture and Rural Development, Hoan Kiem Branch

Headquartered in: 26 - 28 Cua Dong street, Hanoi

Bank for Agriculture and Rural Development, Hoan Kiem Branch is level 2,subsidiary Hanoi branch It’s trading Room was located in 19 Cua Dong Street,Hoan Kiem district, the largest district of Hanoi capital Where is the center of