In our economy today, household production economy accounts for a very important position, and its potential growth is also very large. To expand the scale of production and innovate the equipment as well as engage in economic relations, the producers definitely need capital. However, their own sources of capital are very limited, while accessing to the banks’ capital still meets many barriers. These facts has reduced the effectiveness of exploiting the potential of household production economy.
PREFACE In our economy today, household production economy accounts for a very important position, and its potential growth is also very large. To expand the scale of production and innovate the equipment as well as engage in economic relations, the producers definitely need capital. However, their own sources of capital are very limited, while accessing to the banks’ capital still meets many barriers. These facts has reduced the effectiveness of exploiting the potential of household production economy. From the actual situation at the local and the overall development strategy of banking sector, the Vietnam Bank for Agriculture and Rural Development – Son Dong Branch has determined its long-term goals in the rural agricultural markets, and economic sectors mainly are household production units. However, in reality the expansion of lending to households is increasingly difficult due to small loans and high cost operations. Therefore, extending households lending must be accompanied by improving quality and security in the operation of bank credit. If so, the business of banking would actually become a leverage to promote economic development. Starting from the arguments and actual examination of loans to producers at the AGRIBANK - Son Dong Branch, the writer have decided to choose the topic "SOME SOLUTIONS FOR THE ENHANCEMENT OF HOUSEHOLD PRODUCTION LENDING ACTIVITIES AT AGRIBANK – SON DONG BRANCH" as the subject for this internship report. The structure of this report is designed in three parts: Part 1: Introduction of Agribank and Son Dong Branch Part 2: Evaluating the effectiveness of household production lending at the branch Part 3: Recommendations and Conclusion In this paper, the writer would like to send great thanks to MA. Dinh Hoang Minh who has given useful guidance and valuable suggestions for the writer; to Ms. Thuy, Mr. 1 Lanh, Ms. Ha and Ms. Hien who directly instructed the writer for their gracious help of creating opportunities and good conditions for the writer to take part in practical activities during internship period. However, owing to the writer’s lack of experience and knowledge as well as the limited scope of the research, some shortcomings and mistakes are unavoidable. Please kindly take into account. 2 LIST OF ABBREVIATION Abbreviation Meaning Agribank Vietnam Bank for Agriculture and Rural Development ASDB Agribank’s Son Dong Branch SBV State Bank of Vietnam ABIC Agriculture Bank Insurance Joint Stock Corporation VBA Vietnam Bank for Agriculture LIST OF TABLES AND DIAGRAM Table 1.1 Fundamental information of Vietnam Bank for Agriculture and Rural Development………………………………………………………………………… p.08 Table 1.2 Agribank’s business volume as of October 2013………………………… p.10 Diagram 1.1 Organizational structure of Agribank’s Son Dong Branch…………… p.12 Diagram 2.1 Loans structure at Agribank’s Son Dong Branch according to economic sectors in 2011, 2012 and 2013……………………………………………………… p.14 Table 2.1 Debts structure by groups at Agribank’s Son Dong Branch from 2011 to 2013……………………………………………………………………………… p.15 3 INTERNSHIP DIARY 4 5 Date Tasks Week 1 (July, 1 st – July, 4 th ) Appraisal Process 1 - Learnt about Son Dong Branch’s organizational structure and working environment. - Learnt how to scan B/W or color, use photocopy machine 2 - Learnt about the process of appraisal and approving a loan at the branch. - Observed Mr. Lanh guided customers’ how to prepare a full set of loan documentations and made a minute of hand- over documents for customers. 3 - Read legal regulations of government which are related to credit activities. - Presented 1 documents to be signed by the Head of Business Development and Planning Department. 4 - Wrote several application form in loans documents for customers. - Read the Decision No. 666/QĐ-HĐQT-TDHO of the Agribank Board of Director about lending provisions for customers in the banking system of Agribank. Week 2 ( July, 7 th – July, 11 th ) Loans Documents 7 - Double – checked to see whether all important information in credit agreement and certificate of land use are exactly matched. - Arranged credit documents (application for loans, credit insurance application and other important administrative papers) - Photocopy documents 8 - Double - checked documents upon 2 criteria: accuracy (including red stamp and authentic signature) and adequacy. - Observed Mr. Lanh checked customer’s account balance - Presented credit documents to be signed initially by the Head of Business Development and Planning Department and then by General Director of the branch. 9 - Scanned black and white payment orders for storage in database - Arranged documents - Double – checked to see whether all important information in credit agreement and certificate of land use are exactly matched. 10 - Presented credit documents to be signed initially by the 6 1 - INTRODUCTION OF AGRIBANK – SON DONG BRANCH 1.1 Introduction of Agribank 1.1.1 Fundamental information Table 1.1 Fundamental information of Vietnam Bank for Agriculture and Rural Development Bank’s name Ngân hàng Nông nghiệp và Phát triển Nông thôn Việt Nam Bank’s name in English Vietnam Bank for Agriculture and Rural Development Name abbreviation AGRIBANK Logo Chartered capital VND 29,605 billion (as of October 2013) Headquarters No. 18 Tran Huu Duc street, My Dinh, Tu Liem, Hanoi Telephone (84 – 4) 8313717 Fax (84 – 4) 8313719 Email webmaster@agribank.com.vn Website http://www.agribank.com.vn/ (Source: www.agribank.com.vn) 1.1.2 Agribank's milestones in development 1988: Established under the name of Agricultural development Bank of Viet Nam by decree No. 53/HDBT dated 26 March, 1988 of the Council of Ministers (now the Government). 7 1990: Changed name to Vietnam Bank for Agriculture (VBA) 1991: Established the representative office of Vietnam bank for Agricultural in Ho Chi Minh City. 1992: established VBA provincial branches. 1994: Approved new innovative management system model of the Agribank and began to be organized into a State-owned Corporation. 1996: Changed name to Vietnam Bank for Agriculture and Rural Development (AGRIBANK) 2001-2010: Implemented the plan of bank restructuring. 2001: Became the leading commercial bank in Vietnam, with the most extensive network of branches in rural areas. 2002: Became a member of APRACA and the Confederation International du Credit Agricole (CICA). 2009: Utilized modern information technology to develop and introduce modern banking products and services, payment connectivity with the State Treasury, in coordination with Taxation and Customs Offices for the collection of state budget; 2010: Be in Top 10 of 500 largest enterprises in Vietnam and continuously to be the largest Financial Institution in Vietnam. 2011: Completely changed into Ltd company with 100% capital of state and became the leading credit institution for pilot lending for the new rural construction 2012: Won the title such as: Top 10 biggest enterprises in Vietnam – VNR500; Top ASEAN Enterprise, Top brand name of ASEAN; Top Bank for Payment; Top Banks of Vietnam. 2013: Held the 25 year universal (March 26, 1988 – March 26, 2013) 8 1.1.3 Business volume Table 1.2 Agribank’s business volume as of October 2013 (VND billion) Total asset 671,846 Total fund resource 593,648 Equity 29,605 Total outstanding loans 523,088 (Source: www.agribank.com.vn) Agribank is also the largest bank in Viet Nam in terms of workforce, operating network and customer base. As of October 2013, the operating network of Agribank includes 2,400 branches and transaction offices nationwide which is operated by 40,000 staffs. 1.2 Overview of Son Dong Branch Vietnam Bank for Agriculture and Rural Development – Son Dong Branch was established in 26 th March, 1988 to perform two main functions including state management and trading currency. Agribank’s Son Dong Branch is a class III branch under the control of the Bank for Agriculture and Rural Development in Bacgiang. Right from the beginning of its operation, though was difficult due to the lack of manpower and facilities, but the leadership and staff of the branch has made great efforts to achieve good results and significant contributions to the development of Agribank. Getting through the crucible of the market economy, ASDB has stood firm and always played a major role in the financial market of rural credit in Son Dong. 1.2.1 Main products and services 9 Accounts and deposits: accepting deposits and mobilizing savings with the diver, attractive interest rates such as promissory notes, bonds, certificates of deposit Loans: lending in short, medium or long term, daily life consumption, investment trusts; mortgage lending by valuable papers, co-sponsored loans, lending by issuing credit cards Guarantee: implementing businesses; payment guarantees; bid guarantee; contract performance guarantee, contract of guarantee, guarantee confirmation. Domestic payment services: domestic money transfer services, service of collection and payments; state budget collection services, bill payment services, automatic collection services… Foreign Exchange Services: cash transfer; foreign currency trading; remittance payment; currency exchange… Border payment with Laos: including bank drafts, cross-border money transfers documents, trading transaction payment, deed of trust and e-transfers, letters of credit and letters of trade border payment guarantee letter. Card Services: issuing domestic debit card (success); international debit card (master/visa debit); International credit cards (Master/Visa credit); business card set. Electronic banking (e-banking): mobile banking services (VnTopup - phone recharging services via SMS, SMS banking; Atransfer – SMS money transfer service); VnMart services, internet banking; Apaybill Insurance: Security credit insurance; Insurance for international cardholders, cargo insurance, fire insurance; insurance of automobiles, motorcycle, human; other kinds of insurance. Other services: provide account information; automatic salaries paying and receiving service; safe leasing services; consulting services and other services 1.2.2 Organizational structure By the end of July 2014, the total number of employees in ASDB has reached 35. Its organizational structure includes 2 departments and 2 transaction offices, which is depicted as the following chart: 10 [...]... Some recommendations for the improvement of household lending activities at the branch The ASBD is a part of the whole Agribank system, then the development of ASBD in household loans obviously contributes the growth of the whole system The problem here is that how to help ASBD not only meet and expand the amount of customers both in quantity and quality but also further strengthen the operations of. .. Organizational structure of Agribank s Son Dong Branch (Source: Agribank s Son Dong Branch) 2 - EVALUATING THE EFFECTIVENESS OF HOUSEHOLD PRODUCTION LENDING AT THE BRANCH 2.1 Current situation 2.1.1 Qualitative criteria Market share and develop the market: Developing the market at the branch currently faces several difficulties since the market share of ASDB decreases slightly According to the income... capital loans for construction purpose… All these reasons make the lending activities at ASDB 16 face many risks and the bank does not expand the production lending at this time The fierce competition among the banks in drawing the customers’ attention is also a cause of existing limitations at the branch Though other commercial banks have not appeared in Son Dong district as yet, the presence of Vietnam... operations of household loans Based on the research on household loans and the real situation at ASBD, the writer would like to offer some suggestions to promote the production household lending activities as follows: 17 3.1.1 Perfecting the policy of information, research and investigation on factors related to household loans The bank staff needs to study and fully understand the general information of macro... evaluation of loans for production households of ASDB has not been highly appreciated The appraisal and inspection before, during and after the lending are not being able to detect customers’ errors The ability to increase the prestige of the bank: Meanwhile the demand for loans by households is in an increasing trend, the reputation of ASDB has been also reinforced significantly helping raise the. .. the Agribank Culture, to all personnel in the office in order to serve the customers the best The implementation of the lending process: In general lending activities and loan production households in particular, ASDB complies all the processes and procedures of the Vietnam Bank for Agriculture and Rural Development Besides, ASDB continually improves the quality of loans and keeps close control of. .. to production lending activities Those are all about guidelines and policies of the government about both the economic - social changes and the financial – banking sector domestically as well as internationally Production lending activity is sensitive to the fluctuations in economic, political, social changes; so, the macro information will hold the important part in the development of household production. .. develop lending activities, banks must raise capital corresponding to the demand, but still within the range allowed by the State Bank Therefore, the interest rates are high or low depends 18 largely on the interest rates of banks From the above fact, Agribank needs to develop appropriate pricing policies for both mobilization and loans to ensure profits for bank and the customer benefits Controlling lending. .. predicting the economic issues, as well as the magnificent prospect of credit operations in the future Though this is the personal vision, it does affect the overall operation of the bank Once personal experience has become an accurate prediction, it is the creation of credit officers Secondly, they also should have the prestige in social relations This represents moral standards and communication skills of. .. lending interest rates: using flexible rate corresponding to the quality of service This means that depending on the object to the loan and depending on the period that ASBD can adjust interest rates fluctuating within the range allowed not only to cover the cost, but also to bring profit to the bank Improving the household loans products of the bank: In fact, the product lists of different banks . producers at the AGRIBANK - Son Dong Branch, the writer have decided to choose the topic " ;SOME SOLUTIONS FOR THE ENHANCEMENT OF HOUSEHOLD PRODUCTION LENDING ACTIVITIES AT AGRIBANK – SON DONG BRANCH& quot;. make them left the bank without financing. 3 - RECOMMENDATIONS AND CONCLUSION 3.1 Some recommendations for the improvement of household lending activities at the branch The ASBD is a part of the. by the 6 1 - INTRODUCTION OF AGRIBANK – SON DONG BRANCH 1.1 Introduction of Agribank 1.1.1 Fundamental information Table 1.1 Fundamental information of Vietnam Bank for Agriculture and Rural