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CHAPTER 1: RESEARCH OVERVIEW 1.1 The urgency of the research topic Hunger eradication and poverty reduction, environmental protection, economic growth associated with social justice, promoting gender equality are among the top goals in the cause of national renewal With this goal, microfinance in Vietnam has been playing an important role in strengthening financial support through step by step meeting the demand for loans and financial services to deliver economic development, especially in rural areas and low-income households Microfinance activities are aimed at low-income households with small loans, aiming to help them participate in production activities or start small businesses Vietnam is an agricultural country, the majority of the income population is low, so the development of microfinance services is one of the positive solutions to support people to generate income and improve their lives living Currently, together with the Social Policy Bank (established on the basis of the proposal of Agribank in 1995 to establish the Bank for the Poor and was separated from Agribank), the Farmers Assistance Fund (directly under Trung The Vietnam Farmers' Association, Agribank is one of the official channels to provide microfinance services With a nationwide network of nearly 2,300 branches and transaction offices located in all regions, remote areas, island districts and pioneering and key in implementing policy credit programs, as well as Flexible capital mobilization, prioritizing the transfer of capital from urban areas to rural areas, Agribank has expanded its microfinance activities nationwide with the number of big customers ranked third after the Social Policy Bank and People's Credit Funds As of December 31, 2017, the total capital of Agribank reached 1,074,798 billion VND, in which savings deposits from residents were 853,054 billion VND Total investment debt of the economy reached VND 876,497 billion, of which outstanding loans for rural agriculture were VND 645,367 billion, accounting for 73.6% of the total outstanding loans of the economy, focusing on customers as individuals and households with total outstanding loans of VND 605,612 billion, accounting for 69.1% of total outstanding loans of the economy, with 3,685,681 customers, accounting for 99.4% of total customers across Agribank system With investment capital for "Tam nong" accounting for 51% market share of the entire banking industry for this sector, Agribank affirmed its leading role in the rural financial market During 30 years of establishment and development Agribank has constantly improved its ability to access capital to customers, many people across the country have access to capital with preferential interest rates to develop production and opportunities improve the quality of life, reduce poverty and contribute to promoting economic restructuring However, compared to other microfinance institutions in Vietnam and some foreign commercial banks providing microfinance services in the region and the world, the development of microfinance services is The tissue of Agribank also reveals some limitations such as the provision of simple services which are not commensurate with the development potential, there is not a specialized department to monitor and manage microfinance activities, With the desire to contribute to helping Agribank can better implement its political role - is the leading commercial bank in rural agricultural development - the learner has chosen the topic: "Developing financial services micro-principal of Vietnam Bank for Agriculture and Rural Development "as the thesis topic 1.2 Overview of published works and research gaps 1.2.1 Overview of published works Microfinance has been known since the 1970s and in the 1980s, there was a landmark development by the birth of Grameen Bank in Bangladesh Since then, there have been many domestic and foreign studies in this field and the system can be grouped as follows: 1.2.1.1 Studies on microfinance development and the role of microfinance Jonathan Morduch (1999), “Promise of Microfinance”, Journal of Economic Literature, Vol 37, No 4, pp 1569-1614 Report of the Seminar "Promoting comprehensive financial development through innovative policies" is carried out by APEC's System Capacity Building Advisory Group, APEC Business Advisory Council, Banking Institute Asian Development, and Comprehensive Financial Development Alliance, April 3-4 / 2009, Dr Ha Hoang Hop, Mr Nguyen Minh Huong, Mr Ngo Thi Minh Huong (2008), "Vietnam after WTO accession: Microfinance and rural poor access", Main report of Center for Development and Integration (CEDI), Proceedings of the National Conference on "Microfinance Development in Vietnam" (2009) (coorganized by the Citi Foundation, the Banking Academy, the Microfinance Working Group) Research by Assoc Dr Nguyen Kim Anh, Assoc Dr Ngo Van Thu, Assoc Dr Le Thanh Tam and MA Nguyen Thi Tuyet Mai, "Microfinance with poverty reduction in Vietnam - Testing and comparison" (2011) In 2012, the Asian Development Bank had a special evaluation study of the Independent Review Department "Microfinance Development Strategy 2000" based on evaluating activities to support 21 member countries in the field microfinance sector Thesis by Nguyen Duc Hai, "Developing microfinance in Vietnam" (2012) 1.2.1.2 Studies on microfinance institutions and criteria for assessing sustainability Models to test the relationship between accessibility and sustainability of microfinance institutions have been developed and applied to a number of countries: R Christen and his colleagues in 1995 built linear modeling of the relationship between accessibility and sustainability in the work " Maximizing the Outreach of Microenterprise Finance: An Analysis of Successful Rural Finance Programs”; D Thys clarifies this model in the study " Depth of Outreach: Incidental Outcome or Conscious Policy Choice” in 2000; This model was tested by Olivares Polanco with data from Latin American countries and presented in the book " Commercializing Microfinance and Deepening Outreach: Empirican Evidece from Latin America” in 2003 Simultaneous analysis of factors and equations on the relationship between two levels of access and sustainability are described by G Luzzi and S Weber developed and tested in 2006 in the study of "Measuring the Performance of Rural Finance Institutions” Nguyen Kim Anh and Le Thanh Tam and colleagues, (2013), "Sustainability of microfinance institutions in Vietnam: Current situation and some recommendations" Assoc Dr Nguyen Kim Anh, (2014), research topic "Microfinance in Vietnam, current status and policy recommendations" Research by Associate Prof Dr Nguyen Kim Anh, Dr Phi Trong Hien and participants: MSc Quach Tuong Vy, MSc Doan Thai Son, MSc Nguyen Thi Tuyet Mai, (2016), "Transforming micro organizations in Vietnam: lessons learned from microfinance institutions" Studies of many authors in the proceedings of the national scientific workshop "The role of microfinance institutions on Vietnam's socio-economic development", (2016) (by the State Bank of Vietnam) , Banking Academy co-organized Nguyen Quynh Phuong, (2017), Doctoral thesis: "Developing activities of microfinance institutions in Vietnam" 1.2.1.3 Studies on micro-finance development in agriculture and rural areas J Ledgerwood, "Rural Finance Handbook: Rural Finance Handbook (An Institutional and Financial Perspective), written in 1999, M Zeller in his work "The triangle of rural finance: Financial sustainability, outreach, and impact”, in 2002 launched a triangle framework for evaluating the operational development of microfinance institutions; and follow-up research in 2003 on "Models of Rural Financial Institutions” D Steinwand (2003) with the study " The challenge of sustainable outreach: Five case studies from Asia” Yunus studies (2003) on "Reducing poverty by 2015" and 2005 " Expanding Microcredit to Reach the Millennium Development Goal” Le Thanh Tam, (2008), PhD thesis "Development of rural rural financial institutions in Vietnam", Assoc Dr Nguyen Kim Anh and colleagues, "Developing microfinance in agriculture and rural areas in Vietnam", (2010), Statistical Publishing House Nguyen, B and R Vogel (2011) "Rural Finance and Microfinance in the Lower Mekong Region: policies, institutions and market outputs", Joseph P Kaboski and Robert M Townsend, (2012), the study of "The Impact Credit on Village Economies" "The Economics of Microfinance" published in 2005 by Beatriz Armendáriz de Aghion and Jonathan Morduch "The New Microfinance Handbook A Financial The Market System” Perspective is published by Joanna Ledgerwood and colleagues in 2013 "Microfinance in Developing Countries Issues, Policies and Performance Evaluation” (2013) by JeanPierre Gueyie, Ronny Manos, Jacob Yaron released "Microfinance Institusions Financial and Social Performance” (2014) written by Roy Mersland and R Øystein Strøm Assoc Dr Nguyen Kim Anh, Editor, (2017), study: "Microfinance products and services: Current situation and development solutions" 1.2.1.4 Studies on microfinance development of Vietnamese banks Dr Dao Van Hung, (2005), "Developing microfinance activities in Vietnam", Nghi Hong Son (2006), in the research paper "Efficency of rural Financial in Vietnam: Evidence from NGO Scheme in the North and the Central regions" Pham Bich Lien (2016), doctoral thesis: "Developing microfinance activities of Vietnamese credit institutions" 1.2.2 Research limitations and gaps The published scientific works that the Researcher, Research, Analysis, Review and Evaluation above have established a number of basic theoretical basis for the development of microfinance activities of groups credit institutions (commercial banks, social policy banks, microfinance institutions, etc.), analyze the current situation of microfinance activities and the management mechanism of microfinance activities in Vietnam Male, offering solutions to improve the efficiency of microfinance operations Most projects use qualitative methods, only a few research projects are using econometric models to make predictions and increase the persuasive judgment Fellows will selectively acquire these research results and continue to analyze and clarify further issues related to the research topic of the thesis * Limits of published scientific works - Most of the published works only research on microfinance activities of MFIs, especially focusing on assessing the impact of microfinance on agricultural and rural development - Studies on microfinance activities of commercial banks are very few and survey and assessment on a large scale (in many banking systems: commercial banks, policy banks), or case studies in a commercial bank, that is Lien Viet Post Bank - The research data surveyed from the practice of microfinance activities in Vietnam mainly stopped until 2015 while the operating environment of microfinance has changed a lot Therefore, some research conclusions of the works are no longer consistent with the current market conditions - The researches have been published mainly in terms of research of banking and finance majors, no research has been approached from the perspective of commercial business * Research gap Through the overview of published works, it has been found that there are no comprehensive and intensive research projects on "Development of microfinance services of Agribank for the period of 2013 - 2017" that approach under the perspective of specialized in Commercial Business Stemming from the above reality, the PhD student will focus on researching the thesis in the following main contents: - Clarify the rationale for developing microfinance services of commercial banks on two approaches of growth in scale and management of service quality; - Assessing the status of development of microfinance services of Agribank according to the approach angles established at the theoretical basis; - Analysis and verification of service quality and the impact of factors on the development of Agribank's microfinance services; - Analyzing the trend of banking services development, Agribank SWOT analysis in developing microfinance services and proposing solutions to develop the microfinance services of the Bank by 2025 1.3 Purpose, tasks and research questions 1.3.1 Research purposes Proposals are oriented and solutions with scientific and practical bases to develop Agribank's microfinance services 1.3.2 Research tasks - Establishing a theoretical basis for the development of microfinance services of commercial banks on the basis of access of specialized business sectors; - Analyzing and evaluating the current situation of developing microfinance services of Agribank; - Proposing solutions with scientific and practical bases to develop Agribank's microfinance services 1.3.3 Research questions To solve this problem, the thesis focuses on answering the following questions: - What are the methods and management measures to develop the scale and improve the quality of microfinance services of commercial banks? Current situation of applying these management methods and measures at Agribank? - Which analysis / model framework is used to assess customer satisfaction with microfinance services of Agribank, affecting customers' decision on saving and borrowing? - Strengths, weaknesses, opportunities and challenges in the development of Agribank's microfinance services in the coming time? - What solutions should Agribank need to improve the goals and orientations for developing microfinance services in the coming period? Conditions to implement the solution? 1.4 Object and scope of the thesis research 1.4.1 Research subjects The research object of the thesis is the theoretical and practical issues about developing microfinance services, criteria, evaluation criteria and factors affecting the development of microfinance services in Commercial banks in general and Agribank in particular 1.4.2 Scope of the thesis research - In terms of time: the thesis focuses on researching the development status of microfinance services in years: 2013, 2014, 2015, 2016 and 2017, proposing solutions and recommendations to develop financial services micro of Agribank to 2025 - About space: Bank for Agriculture and Rural Development - Content: There are many ways to develop the scale and number of microfinance services, to ensure the depth, the PhD student only focuses on researching basic methods: product development, delivery developing distribution channels, developing markets without studying methods to promote service business such as price policies, etc In addition, because Agribank currently does not have a specialized department to manage and monitor the operation situation Microfinance services, access to data on the development of micro savings and micro insurance services face many difficulties 1.5 Research process and methodology of the thesis 1.5.1 Research process of the thesis DETERMINING RESEARCH PROBLEMS CHOOSE RESEARCH METHOD BUILDING THE RESEARCH PLAN IDENTIFY DATA TYPE NEED TO COLLECT DATA SYNTHESIS ANALYSIS, DATA EVALUATIO N GENERAL AND WRITING REPORT PRIMARY DATA SECOND DATA Diagram 1.1: Research process 1.5.2 Model of research, selection and development of questionnaires and measurement scales 1.5.2.1 Model of research and assessment of micro credit service quality a Theory of service quality measurement b SERQUAL model c Quality components of micro credit services 1.5.2.2 Research model decides to use micro savings service a Theory of intended TPB behavior b Scale measures factors affecting customers' decision to send TKVM 1.5.3 Research methodology of the thesis 1.5.3.1 Methods of collecting information and data In order to solve the research problem comprehensively, NCS has collected and used both primary and secondary data 1.5.3.2 Methods of synthesizing and processing information and data * Primary data processing * Processing secondary data 1.6 New contributions of the thesis (1) Regarding research methods, from the information sources collected (secondary and primary), the researcher used a combination of two qualitative and quantitative research methods In particular, the new contribution of the dissertation is reflected in the quantitative research model on the factors affecting customer satisfaction for micro-credit services and the decision to use micro-saving services of customers at Agribank (2) In theory, the thesis clarifies the theory of content of service development on two aspects of development in terms of quality and quality for microfinance services of commercial banks according to the approach of business specialization trade, concretize the criteria to assess the development of these services at commercial banks (3) In terms of practice, the thesis has analyzed and evaluated objectively and reliably about the situation of developing microfinance services at Agribank on the following contents: considering changes in the number of guests goods, sales / income of services, distribution channels, market; assess customer satisfaction with micro credit services and decide to use micro savings services of customers at Agribank On the basis of the results of qualitative and quantitative analysis, the thesis has pointed out factors affecting the satisfaction of customers using micro credit services (in descending order: capacity of service, interest rate policy, customer care policy, utility of products, services and reliability); factors that reduce the decision to use micro savings services are: distribution channels, bank brand and service quality respectively (4) Regarding solutions, the thesis has proposed groups of solutions based on SWOT analysis and sticking to quantitative research conclusions; limitations and causes to hinder and hinder the development of Agribank's microfinance services Some key solutions for developing microfinance services in the period from 2019 to 2025 are: perfecting strategies, policies and processes of providing microfinance services; diversify and improve the quality of microfinance services; developing the microfinance service supply channel; developing quantity and improving the quality of human resources; developing the ability to apply banking technology for the development of microfinance services and some other solutions 1.7 Structure of the thesis In addition to the introduction and conclusion, the list of references, appendix lists, lists of tables, the thesis is structured with chapters: Chapter 1: Overview of thesis research Chapter 2: Rationale for developing microfinance services of commercial banks Chapter 3: Current situation of developing microfinance services of Vietnam Bank for Agriculture and Rural Development Chapter 4: Orientation and some solutions to develop microfinance services of Vietnam Bank for Agriculture and Rural Development CHAPTER 2: THEORETICAL BASIS OF MICROFINANCE SERVICE DEVELOPMENT OF COMMERCIAL BANK 2.1 Theories about microfinance services of commercial banks 2.1.1 Microfinance and microfinance services 2.1.1.1 The concept of microfinance and microfinance services So far, there is no uniform concept of microfinance in the world, considering the different perspectives of each organization, each program and each object, microfinance can be understood in many different ways and in the thesis , PhD students use the viewpoint of the CGAP (The Poorest Support Group) to express generalization and are relatively more comprehensive: "Microfinance is the activity of providing credit and saving , micro insurance, money transfer services and other non-financial services for low-income groups by an appropriate mechanism, enabling them to carry out production and professional development to increase income improve the quality of life ” Concept of microfinance services: "Microfinance services include financial and non-financial services groups designed, adjusted and implemented by organizations to meet the needs of low-income customers." 2.1.1.2 Types of microfinance services In the microfinance market, microfinance providers can provide microfinance services to customers in one of two approaches as follows: A part Approaching Part of "missing" - credit General approaching Financial and non-financial services Financial intermediation - Lending - Mobilize capital Other intermediaries (payment, insurance, ) Social intermediaries - Form a group - Management training Training linkage Business Development - Marketing - Business training - Production training Sub-sectoral economic analysis Social service - Education - Health and nutrition - Training illiteracy eradication 2.1.1.3 Subjects providing microfinance services Table 2.1: Subjects providing microfinance services Official area Semi-formal area - Commercial banks, investment - Credit and savings cooperatives banks, development banks - Credit associations - Rural service banks - Officially unregistered people's banks are - Banks follow the cooperative credit institutions model - Cooperative banks - Other non-bank organizations - Savings and job creation funds - Financial companies - Village banks are not officially registered Informal sector - Savings associations - Credit and savings associations revolve and its variants Informal financial and investment companies - Commercial personal lenders: (for example: loan sharks); and Official area - Savings organizations under contracts, Retirement Fund - Insurance companies - Official MFIs registered under the law on credit institutions Semi-formal area Informal sector as credit institutions non-commercial (relatives, - Non-governmental organizations provide friends, neighbors ) microfinance - Merchants and owners - Units implementing development projects, with microfinance components - Mutual groups Source: Legerwood (1999) 2.1.2 Concept and characteristics of microfinance services of commercial banks 2.1.2.1 Concept of microfinance services of commercial banks The commercial bank's MFIs are the financial and non-financial services groups of commercial banks that are designed, adjusted and implemented to meet the needs of low-income customers 2.1.2.2 Characteristics of microfinance services of commercial banks * Features of microfinance services - Customers using microfinance services are mainly poor people, low-income people and no collateral - Microfinance services are small in scale - Costs for microfinance services are often higher than other services - Demand for loans is often irregular, short-term and highly seasonal * Characteristics of microfinance services of commercial banks - Financial capability: - Operation network: - Advanced and modern technology - Professionalism 2.1.3 Types of microfinance services of commercial banks 2.1.3.1 Microcredit Micro credit of commercial banks is small, very small loans provided by commercial banks to poor individuals, households and low income for production purposes or consumer loans such as housing repair , building sanitation or some special needs * Features of microcredit: - Microcredit is a form of credit for poor individuals and households and low income - The size of micro-credit loans is small and is usually secured by the reputation of borrowers or loan team leaders - Reasonable interest rates, small installments - Operating costs are often quite large and contain many risks Loan term of micro credit is usually short term Most micro credits have a term of about months to year * Types of micro credit services Commercial banks often provide three types of micro-credit services as follows: individual / individual loans; reciprocal lending and indirect lending in reciprocal groups through third parties 2.1.3.2 Micro savings Micro-saving service is a service where low-income customers send small amounts of money according to their financial ability to accumulate for the future Commercial banks providing types of TKVM are: - Compulsory savings (or compensated balance) is the amount contributed by the borrower as a condition to receive the loan It can be calculated as a percentage of the loan, or a nominal value - Voluntary savings Voluntary savings products based on the assumption that customers already know and have savings, the problem they need is the savings mobilization service offered by commercial banks in accordance with their needs 2.1.3.3 Micro insurance According to Churchill (2006), micro insurance is a form of financial arrangement to protect low-income people against specific risks and hazards as long as customers contribute regular premiums piercing with the ability and cost of the related risks In order to protect insured participants, normally the laws of the countries stipulate, commercial banks are not allowed to provide insurance on their own but are only allowed to act as agents for official insurance organizations 2.1.3.4 Payment service Payment service is the organization to deduct money from the account of the unit to be transferred to the beneficiary's account Micro payments usually include collection, payment, money transfer, In fact, micro payment services have many limitations on the number of products, service quality and the number of participating in payment 2.1.3.5 Non-financial services Non-financial services are services such as training, training and other customer support in production, business and life, etc The main customers who use microfinance services of commercial banks are those Poor and low income, living in rural or remote areas, in addition to providing them with financial products and services to help them have a chance to escape poverty, the important mission of commercial banks is to help they escape poverty sustainably by their knowledge and capacity Through non-financial services, they are provided with the knowledge and skills to be able to develop their careers or create new jobs, access the market, capture the needs and ways of consuming products to collect Get the highest profit In addition, these customers also want to provide health, health, cultural and educational services to develop their spiritual life According to the social development process, the demand for these nonfinancial services from customers is increasingly diversified, so non-financial services are also getting more and more interested 2.1.4 The importance of the development of microfinance services provided by commercial banks - For beneficiaries of microfinance services provided by commercial banks - For commercial banks providing microfinance services - For the whole economy and society 2.2 Developing microfinance services of commercial banks 2.2.1 Concept of developing microfinance services of commercial banks Development of microfinance services of commercial banks is an increase in scale, quantity and quality of existing services and development of new services 2.2.2 Contents of developing microfinance services of commercial banks 2.2.2.1 Methods of developing scale and number of services * Product development Development of new microfinance services is divided into two categories: Firstly, new microfinance services are completely new microfinance services for both commercial banks and markets Second: new microfinance services in category (copy service) is a microfinance service just for banks, * Development of distribution channels: direct distribution channels (or traditional distribution channels); Indirect distribution channel; Modern distribution channel: * Market development (1) Market development by geographical area: The development of local microfinance services, what product supply will be considered by the bank so that the service can ensure the first elements for the their sustainable development (2) Developing according to customer groups: Characteristics of income generation ability; Gender characteristics; Age characteristics; Characteristics of tastes: 2.2.2.2 Management and development of microfinance services of commercial banks * Issuing policies and service delivery processes * Organize personnel apparatus and infrastructure to provide services * Control and evaluate the situation of service provision 2.2.3 Criteria for evaluating the development of microfinance services of commercial banks To assess the development of microfinance services by width and depth, two groups of criteria commonly used for evaluation include qualitative and quantitative indicators, specifically as follows: 2.2.3.1 Quantitative indicators a) The level of increase in revenue / income from microfinance services The formula for calculating the level of sales growth and income from microfinance services is determined as follows: The level of increase Revenue / income of Revenue / income of microfinance in revenue / income microfinance services in year n services in year n -1 = x 100% of microfinance services Revenue / income of microfinance services in year n -1 b) a) Degree of increasing the number of customers using microfinance services Percentage of the number of customers using microfinance services in year n number of customers = x 100% using microfinance number of customers using microfinance services in year n -1 services c) The increase in the number of microfinance services Increase in the number of microfinance services = Number of microfinance services in year n - Number of microfinance services in year n-1 d) Degree of increasing the number of modern distribution channels number of modern distribution number of modern distribution The increase in the channels in year n channels in year n -1 number of modern = x 100% -distribution channels number of modern distribution channels in year n -1 e) Average value of microfinance services Average value of microfinance services = Revenue (income) of microfinance services in year n / number of customers using microfinance services in year n f) Micro-credit bad debt ratio of commercial banks Bad debt ratio = (Microcredit bad debt / Total microcredit outstanding) x 100% 2.2.3.2 Qualitative criteria a) Safety level in providing microfinance services b) Customer satisfaction level on microfinance services 2.3 Factors affecting the development of microfinance services of commercial banks 2.3.1 Subjective factors There are many factors belonging to commercial banks affecting the development of microfinance services, depending on the different classification, the most important factors include: Development strategy and business plan, property nature and operational model, financial potential of commercial banks, microfinance service prices, network characteristics of commercial banks, human resources of credit institutions, risk management capacity and facilities Information technology infrastructure, reputation of commercial banks, 2.3.2 Objective factors Some objective factors affecting the development of microfinance services of commercial banks may include some of the following basic elements: Legal environment, economic environment, political and social environment, elements of customers use the service 2.4 Experience in developing microfinance services of some foreign banks and lessons learned for Vietnamese commercial banks 2.4.1 Experience in developing microfinance services of some foreign banks 2.4.1.1 Agricultural Bank and Thai Agriculture Cooperative 2.4.1.2 Grameen Bank (GB) - Bangladesh 2.4.1.3 Bank Rakyat Indonesia 2.4.1.4 Bank CARD - Philippines 2.4.2 Lessons learned for Vietnamese commercial banks Firstly, build appropriate development strategy of MFIs of the bank Based on the socio-economic situation in each specific development stage of the country, the bank needs to develop a suitable development strategy for microfinance services, the needs of customers, complying with legal regulations and consistent with the trend of developing banking and financial services in the region and the world Secondly, combine the provision of financial services and social services Based on resources, technical conditions and the support of organizations, step by step research and development combined with providing additional training services, agricultural and forestry extension, consulting, advanced technical support capacity These services contribute to improving the efficiency of using financial services for customers, helping them stick faithfully to the organization, thereby creating conditions for commercial banks to become more sustainable Thirdly, diversifying the list of banking products and services The diversification of banking products and services is the inevitable development trend of banks today From the experience of the banks analyzed above if previously focused mainly on traditional banking products, now under the current conditions, there have also been diversified products and services to meet the demand Increasing demand of customer objects Fourth, focus on exploiting the potential of rural areas The rural area is a large market, has its own characteristics, so it has to develop an appropriate development strategy to promote the strengths of this market Experience of Bank Rakyat Indonesia shows that: the mobilized capital in rural areas is not only sufficient to meet the demand for lending in the region but also to transfer capital to invest in other areas Fifth, complete the organizational model combining professional specialization and a wide branch network Due to business characteristics, the majority of bank branches are operating in both urban and rural areas, so the organizational model needs to be divided according to each business segment, each area of operation to ensure security in development and improvement of operation quality On the other hand, due to the characteristics of low-income people often concentrated in the underdeveloped economic areas, it is necessary to develop a wide network of branches, transaction offices and transaction points to these areas, structure organizations need to divide by regions and regions; set up a system of regional offices, branch management units to decentralize management effectively and efficiently Sixth, improve bank management capacity Improving bank management capacity is one of the important strategies for each bank at any stage In order for the management to effectively monitor and mitigate possible risk factors, the bank needs to set up a number of special committees that operate independently with professional departments such as the Committee Risk Management Committee, Internal Audit Inspection Committee Seventh, increasing investment in modern banking technology Building and developing modern banking technology is an indispensable development requirement It is not only a basis for improving bank management capacity but also a foundation for developing a variety of modern banking products and services, keeping up with the development trend of banks in the context integration scene CHAPTER 3: CURRENT SITUATION OF DEVELOPING MICROFINANCE SERVICES OF THE VIETNAM BANK FOR AGRICULTURE AND RURAL DEVELOPMENT 3.1 Overview of Agribank 3.1.1 The process of formation and development Vietnam Bank for Agriculture and Rural Development, international transaction names are Vietnam Bank for Agriculture and Rural Development (abbreviated name "Agribank") was established on March 26, 1988 under Decision No 53 / HDBT of the Chairman of the Council of Ministers with the first name is "Vietnam Agriculture Development Bank" Then the bank changed its name to "Vietnam Agricultural Bank" according to Decision No 400 / CT dated November 14, 1990 of the Prime Minister of the Socialist Republic of Vietnam And according to Decision No 280 / QD-NH5 dated November 15, 1996 and Decision No 1836 / QD-TCCB dated December 28, 1996, the Bank once again changed its name to "Vietnam Bank for Agriculture and Rural Development Male "like today After 30 years of growth and development, Agribank has been awarded many rewards by the Party, the Government and the State Bank for outstanding achievements in the mission for "Tam Nong" for agricultural and rural development and farmers in the renovation period such as: Labor Hero of Doi Moi (2003), Second-class Independence Medal (2008), Vietnam Golden Star (2008), Strong Trademark of Vietnam Development (2016) , maintain the leading position of commercial banks in the ranking of 500 largest enterprises in Vietnam (VNR 500) (2017), Sao Khue Award (2017), Bank for Community Awards, 3.1.2 Functions, tasks and organizational structure The main activities of the Bank include: Mobilizing and lending to organizations and individuals based on the nature and ability of their capital resources; carry out foreign currency transactions, trade finance transactions, commercial discount, bonds, valuable papers and other banking services allowed by the State Bank of Vietnam Vision, is the largest modern bank in Vietnam, operating under the motto of "Safe - Effective Sustainable" with sufficient competitiveness and international economic integration Mission, Agribank is the leading State-owned commercial bank in Vietnam; playing a key role in the national economy, especially in the fields of investment in agriculture, rural development and farmers, contributing to the development of Vietnam's socio-economy The core value "Honest, Proficient, Creative, Quality, Effective" with the business philosophy is "Bring prosperity to Customers" 3.1.3 Service activities and business results of Agribank 3.1.3.1 Service activities - Agribank currently has over 200 products and services divided into 10 groups - Diversified distribution channels of Agribank products and services include: Traditional product and service distribution channel (2,233 branches and transaction offices including: 158 branches of type 1, type 2; 784 branches of type and 1290 transaction offices, affiliated companies, 03 representative offices and 01 foreign branch, mobile transaction points; Distribution channels via ATM and EDC / POS (2,626 ATM and 19,015 EDC / POS); Distribution channels via Mobile Banking; Distribution channels via Internet Banking; Distribution channel through customer payment connection (CMS); Distribution channel with correspondent banks (Agribank currently maintains its correspondent relationship with 825 banks in 86 countries and territories) Agribank aims at three main customer groups: individual customer groups, corporate customers and financial institutions For this group of customers, Agribank has appropriate product and service groups to meet customer needs 3.1.3.2 Business results of Agribank Based on the annual reports of Agribank for years, the PhD student has synthesized the general financial indicators reflecting the situation of Agribank as follows: Table 3.1: Operating network and business results of Agribank for the period of 2013 - 2017 Branch number Targets UNIT Branch Number of transaction offices Transaction Property size Billions dong Owner's equity Billions dong Charter capital Billions dong 2013 Y 2014Y 2015Y 940 941 943 943 943 1333 1313 1314 1299 1290 697.037 2016Y 2017Y 763.59 874.807 1.001.205 1.151.948 40.686 44.870 46.897 49.231 53.691 26.204 28.84 29.004 29.126 30.354 Mobilize capital Billions dong Total outstanding loans to the economy Billions dong Net income from service activities Billions dong 1.796 1.977 Income before tax Billions dong 2.457 10 Income after tax Billions dong 11 ROA 634.505 700.124 810.101 530.600 553.553 673.435 931.17 1.074.798 791.450 863.576 2.122 2.158 2.584 2.528 3.183 4.212 5.066 1.679 1.787 2.372 3.388 4.061 % 0,24 0,23 0,27 0,34 0,35 12 ROE % 4,45 4,34 5,58 6,88 7,57 13 Bad debt % 4,68 4,46 2,01 1,89 1,54 (Source: Agribank Annual Report from 2013-2017) 3.2 Current situation of implementing contents of developing microfinance services of Agribank 3.2.1 Methods for development of Agribank's microfinance services 3.2.1.1 Status of product development With the available advantages of Agribank operating in the three agricultural sectors, Agribank provides basic services: micro credit, micro savings and micro insurance Inside: * Microcredit Agribank is a commercial bank serving not only poor and low-income people in the society, so the microcredit products in the loan portfolio not have many different characteristics compared to other products in terms of lending methods and one in the criteria to identify that is the size of the loan (as stipulated in the study period of the thesis is under 30 million) In the research phase of the thesis (2013 - 2017), Agribank is implementing credit services: Circulating loans for farmers; Loans for new rural construction; Loans prove financial; Loans for cattle and poultry; Loans for coffee replanting; Loans to households and individuals through a loan team / association; Loans according to credit limits for small-scale production and business households; Preferential credit for "Clean Agriculture"; Lending to borrowers according to resolutions, decrees of the Government, According to the survey results, the main purpose of using loans is to build new rural areas (25%), then buy livestock and poultry (24.5%), replant coffee trees and develop aquatic products , developing clean agriculture and high-tech agriculture - Micro-credit objects of Agribank are mainly poor and low-income households - Lending interest rate: lending interest rate is 1-2% lower than other subjects - Loan size: According to the provisions of Article 7, Circular No 07/2009 / TT-NHNN, the total loan balance for customer is VND 30 million / loan - Loan term: According to survey results, the loan term of Agribank is less than year, accounting for the highest proportion * Micro savings Agribank provides micro credit products such as term savings, flexible savings, saving deposits periodically, saving deposits periodically, The results from the questionnaire for the question: "What is the purpose of Mr / Mrs savings account for?", Most of the customers (62.5%) asked that they sent savings here because of Agribank It is compulsory to send, it is considered as a form of collateral for loans, in addition they accumulate to let their children have the opportunity to study, or to purchase property, vehicles and houses in the future * Micro insurance Currently, Agribank is providing microfinance services as a distribution agent for ABIC, mainly credit security services - the first affiliate product - creating convenience for borrowers when using the banking service package - Insurrance Credit security products protect lives and health of borrowers at Agribank In case the borrower is unfortunate insurance, having the risk of affecting the health and ability to repay the loan, ABIC will pay the amount to Agribank on behalf of the borrower Loans outstanding, the difference between the amount paid and the loan outstanding (if any) will be paid to the remaining beneficiary When providing insurance services, Agribank is entitled to commissions depending on the agreement and is calculated as a percentage of premium collected This percentage is not fixed, some places are 25% (for direct selling branches), there are 13% branches (for branches sold indirectly through organizations) and depending on the premium collected Yes, if many of these rates can be higher Results from the questionnaire for the question: "If you have insurance needs, the purpose of insurance is to meet?", The answer "Loan repayment ability" is the purpose of many customers selected goods (accounting for 71%), because when they participate in insurance, if they happen to have a risk of loss of life, their relatives will not have to pay the debt, even they will be supported with burial fees and reduce interest rates on loans Besides, the poor also have a high demand for agricultural and livestock insurance (18.75%) This is also a suggestion for ABIC and Agribank in the future * Payment service Up to now, Agribank and other commercial banks in Vietnam have not participated in providing payment and money transfer products and services as a product of MFI With the advantage of 100% state-owned commercial banks, the largest number of branches / transaction offices in Vietnam, the fact that Agribank has not provided micro payment services is really a waste, not commensurate with internal force his availability * Non-financial services In Vietnam's microfinance market, Agribank is one of the three largest MFIs but does not regularly provide non-financial services to customers This is one of the obstacles in competing for providing microfinance products, reducing the efficiency of using Agribank's microfinance resources According to the statistical results for the question: "Are you supported with other services?", 12.5% answered that they were supported non-financial services, compared with 87.5 % of unsupported customers, this is a relatively small percentage, Agribank also left a large number of customers without providing other services along with micro-credit and micro-saving services, micro insurance 3.2.1.2 Development status of distribution channels * For microcredit Among the surveyed customers, it is possible to assess that customers directly borrowed at branches / transaction offices accounted for 37.5%, the rest was borrowed via indirect groups / groups + Direct lending method for individuals and small businesses and characteristics are traditional transactions, ie for each customer, or each loan arises, the customer will come to file borrowing and trading directly at Agribank branch / office + Group lending method has been implemented to date with nearly 20 years with the number of members per group averaging about 22 people in a group - which is the "extended arms" of Agribank to every village In the island district, the ability to access bank credit capital of farmers has been increased, especially in rural, mountainous, deep-lying and remote areas In October 2017, Agribank implemented the method lending to groups through groups and mobile loan groups + Modern distribution channel: due to the characteristics of customers of Agribank largely (about 80% according to Agribank's report), it is people in rural and remote areas, so the current distribution channel Great bank for the undeveloped microfinance services But in the context of the 4.0 revolution, technology has spread strongly like today, surely in the near future, Agribank will provide these services to be able to compete with commercial banks providing other microfinance services * For micro savings With the micro savings service of Agribank, Agribank now mobilizes through basic channels: directly and through groups + Direct channel: customers bring their savings to Agribank's branches and transaction offices to send money By the end of 2017, Agribank has deployed mobile banking through specialized cars + Indirect channel: Agribank mobilizes savings from low-income customers through the group of Veterans' Association, Vietnam Women's Union, * For micro insurance services: For micro insurance service, credit security is distributed directly through agents who are officers of Agribank system nationwide 3.2.1.3 Market development situation - According to administrative geography: because Agribank is a bank always associated with the mission of "tam Nong", it can be seen that currently, microfinance services are strongly deployed by banks in rural areas , the region of the remote, mountainous areas of the island, - According to Agribank's customer set: similar to other MFIs, the customers of Agribank are mainly women (according to the results from the survey, over 90%) 3.2.2 Management and development of Agribank's microfinance services In order to manage and ensure the quality of the development of financial and banking activities, the departments of the Head Office, branches, transaction offices, of Agribank need to undertake their own tasks however, for the management of the development of microfinance services, especially micro-credit services, there is currently no specific document clearly defining which parts will take care of monitoring the development of those services, all of which fluctuate in terms of services, combined with the same services provided to high-income people of the bank line This is a huge limitation of Agribank if it really aims to further develop microfinance services in the future 3.3 Results of developing microfinance services of Agribank 3.3.1 Analyzing the results of developing microfinance services through indicators of scale and number of services 3.3.1.1 Microcredit service Table 3.3: Some criteria to evaluate the development of Agribank microcredit service from 2013 - 2017 Targets Number of customers Number of micro credit services Credit outstanding * Direct loan - Number of member - Average debt balance per member - Bad debt / total debt ratio * Borrow through the group - Number of groups + Veterans Association + Women's Union + Other Association - Number of member - Average debt balance per member - Average debt balance on a loan group - Number of branches deployed - Bad debt ratio / total outstanding loans Unit (million people) Service (million dong) (million dong) (million people) (million VND / tv) % (million dong) Group Group Group Group (million people) (million VND / tv) (million VND / team) branch % 2013Y 2014Y 2015Y 2016Y 2017Y 1,5 0,9 0,8 1,1 1,45 7 31.281.950 21.267.225 17.261.335 29.437.500 30.912.590 27.904.250 15.288.696 10.943.054 16.403,730 14.868.700 1,1 0,5 0,5 0,6 0,8 24,5 28,8 23,8 32,2 23,6 3.0 2.8 2.6 2.0 2.0 3.377.700 5.978.529 6.318.281 13.033.770 16.043.890 15.909 18.182 14.545 23.182 30.000 9.845 11,780 9,500 14,000 15,894 5.156 5.343 3,900 8,000 10,563 908 1.059 1.145 1.1812 3.543 0,4 0,4 0,3 0,5 0,7 9,7 14,9 19,7 25,6 24,3 212,3 328,8 434,4 562,2 534,8 30 40 52 62 75 1,5 1,2 0,9 0,7 0,3 (Source: PhD student synthesized from the thesis of Nguyen Quynh Phuong, ADB, from the annual financial reports and reports of Agribank from 2013 - 2017) The above table of figures can be generalized that: The number of customers of the service sector, the amount of credit service users, in years of study from 2013 to 2017 is unstable, falling sharply in 2015, specifically: * About the situation of customers using the service of microfinance Through the synthesis of research documents, the growth rate over the years is not stable In years of research, in 2015, the number of customers decreased to the lowest, compared with 2013, decreased by 0.7 million, in 2014 decreased by 0.2 million, in 2016 fell by 0.3 million and in 2017 decreased by , 65 million people The reason for the sharp decrease in the number of these customers is because 2015 was the key year Agribank implemented the first phase restructuring plan after the Great Depression of the bank, reducing the focus on microfinance activities and until In 2017, although the number of customers increased, it was still lower than the number of customers in 2013 of 0.05 million Besides, through the above data table, we can also see that the direct borrowers tend to decrease, contrary to the development trend of the number of borrowers through groups * About outstanding loans for micro credit services Not only reducing the number of customers, the above table also shows that the outstanding loans of micro-credit services also fluctuate over years, especially sharply reduced in 2015 (the reason is explained in part above): in 2015, the credit debt balance was reduced to VND 14,020,615 (42.82% respectively) compared to 2013, decreasing VND 4,005,890 million (equivalent to 18.84%) compared to 2014, decreasing 12,176,165 VND million (equivalent to 41.36%) compared to 2016 and decreased VND 13,651,255 (equivalent to 44.16%) compared to 2017 In addition to the above reasons, the Decree on agriculture and rural areas has provided for the increase of non-mortgage loans from 10 million to 50 million This has enabled borrowers to borrow larger loans, outstanding loans of TDVM (from 30 million VND or less) of Agribank since this Decree significantly reduced Outstanding loans for micro-credit services by direct lending tend to decrease and instead to increase credit balance by lending method through groups and groups In 2013, the number of groups borrowing loans managed by the Veterans Association is 9,845 (group), accounting for 62%, the Women's Union is 5,156 (the group), accounting for 32%, by 2014 the total number of groups and groups increased to 2.273 (group ) corresponding to 14%, in 2015 decreased 3,636 (group), equivalent to 20%, in 2016 increased to 8,636 (group) increased by nearly 60% and by 2017 increased to 6,818 (group), equivalent to about 30%, * Average credit balance Looking at the chart 3.12 on the side, it is clear that the average credit debt balance of Agribank tends to increase, especially with the form of loans through groups, from 9.4 million / customer (in 2013) increased to 24.3 million (2017) corresponding to 152% The bad debt ratio of Agribank decreased over years, even for direct loans and loans through groups and groups With the form of borrowing through groups, NPL ratio is 0.3% in 2017 while direct borrowing is 2.0% This shows that the recovery of TDVM capital through groups and groups is better, that is why Agribank now increasingly promotes group and group lending to minimize bad debts and quickly recover capital,… * The number of branches implementing group loans increased with the study period, from 2013 with 30 branches, after years the number of branches increased to 75 (up 150%) This is a good sign, but compared to the number of Agribank's branches spanning Vietnam, nearly 2,300 transaction offices and branches, 75 is probably a modest number compared to the available potential * Average loan balance on a loan group also increased over the years from 2013 to 2016 and decreased slightly in 2017 In 2013, the average outstanding loan on a loan group was 212.3 million, up 116.51 million VND (equivalent to 55%) in 2014, an increase of VND 105.56 million (equivalent to 32%) in 2015, an increase of VND 127.86 million (equivalent to 29%) and in 2017 alone, the loan balance decreased slightly by 27.44 million (4.9% respectively) 3.3.1.2 Micro savings service Among commercial banks providing microfinance, Agribank is the biggest unit in terms of overall operation scale but the secondary data exploitation on microfinance services is inadequate, so the analysis of development of microfinance services is difficult Table 3.4: Some indicators to evaluate the development of Agribank's micro savings service from 2013 - 2017 Targets The increase in the number of micro savings services Total deposit of micro savings service - Mandatory savings - Voluntary savings Number of customers using micro Unit Service Million dong Million dong Million dong Million people 2013Y 2014Y 2015Y 2016Y 2017Y 2 2 26.195.820 18.337.074 4.636.030 25.879.650 28.131.242 20.956.656 5.239.164 1,05 14.669.659 3.66 7.415 1,00 3.708.824 927.206 0,40 20.703.720 5.175.930 1,00 22.504.994 5.626.248 1,04 savings service - Mandatory savings - Voluntary savings Average deposit amount Million people Million people Million VND / KH 0,84 0,21 0,81 0,19 0,32 0,08 0,8 0,2 0,83 0,21 24,95 18,34 11,59 24,65 26,79 (Source: PhD student synthesized from the thesis of Nguyen Quynh Phuong, ADB, from the annual financial reports and reports of Agribank from 2013 - 2017) From the data in Table 3.4: Agribank's microfinance service was also strongly changed in 2015 from the number of customers to the total amount of deposits with the main reason as mentioned above * Customers number: In 2015, the number of micro-saving customers decreased to 62% (0.65 million people) compared to 2013 and 60% compared to 2014 At the same time, the data also showed that customers save micro The tissue is mainly involved in the form of compulsory savings (accounting for about 80%), Figure 3.16: the number of micro saving customers of Agribank * Regarding the total amount of micro-savings deposits, we find that the amount of deposits in 2014 decreased by VND 7,858,746 million (equivalent to VND 7,858,746 million (equivalent to 30%) and in 2015 plummeted 75% compared to In 2014 (equivalent to VND 13,701,044 million), Agribank only mobilized VND 3,708,824 million from compulsory savings (reducing VND 10,960,835 million), mobilizing VND 927,206 million from voluntary savings (reducing VND 2,740) 209 million), but savings mobilization has increased again to the level of 2013 and 2014 The amount of money mobilized from compulsory savings is mainly, salary mobilized from voluntary savings accounts for only about 20% * The average amount of deposit per customer in 2017 is 26.79 million VND, 2.14 million VND higher than in 2016, 15.2 million VND higher than 2015 (132% respectively), VND 1.84 million higher than in 2013 and 2014 * About the number of micro savings services: designed in general with other services including: Term savings, Flexible savings, Floating rate term savings deposit, Deposit savings Periodically, Savings deposits are not periodically and can be divided into basic services: compulsory savings and voluntary savings 3.3.1.3 Micro insurance service Credit security is deployed through Agribank's general agent / agent channel - it has been 10 years by 2017 The strength of this product is thanks to the network of Agribank nationwide so when risks arise, ABIC almost immediately organizes visits, compensates for liability as committed to customers, Through Agribank system, borrowers are encouraged to participate in Credit Security - Agribank lowered the interest rate by 0.2% / year Table 3.5: Some indicators to assess the development of Agribank's VSCF from 2013 - 2017 Targets Number of customers using micro insurance services Number of micro insurance service services Number of general agents providing micro insurance services Point of sale Agent 6.Incomes of micro insurance service Unit People Service general agents CN / PGD People Million dong 2013Y 2014Y 745.000 660.300 2015Y 2016Y 2017Y 553.800 781.000 1.029.500 2 1 97 102 125 142 153 872 934 956 1.053 1.131 9.800 11.340 13.740 16.590 18.000 87.433 64.014 59.379 88.607 93.047 (Source: synthesized from ABIC's 5-year summary reports of 2013-2017) From the table above, we see that the proportion of borrowers who buy credit insurance insurance accounts for 71% / borrowers at Agribank This figure shows that a large proportion of customers have not participated in this insurance Cause: on the side of borrowers, they still not fully understand the meaning of this product; towards ABIC and other units to coordinate and not actively deploy products to customers Income of Agribank from micro-insurance agency service activities also fluctuated unevenly over the years, in 2014, income decreased by 24,508 million VND, equivalent to 26.7%, in 2015 decreased 4,851 million VND, equivalent to 7.25 % compared to 2014, this is the lowest reduction in years because this is also the time when credit balance is at the lowest level By 2016, Agribank's income increased to VND 30,587 million, equivalent to 49.2% and by 2017 Agribank's income reached the highest level, higher than that of 2016 of VND 4647 million, equivalent to 15.2 % As reported by Agribank, 43% of microcredit outstanding loans are eligible for insurance About quantity From the above table of data, the percentage of borrowers who buy credit insurance insurance accounts for 71% / customer loan at Agribank This figure shows that a large proportion of customers have not participated in this insurance Cause: on the side of borrowers, they still not fully understand the meaning of this product; towards ABIC and other units to coordinate and not actively deploy products to customers The income of Agribank from VSC's agency activities has also changed unevenly over the years, in 2014, the income decreased by 24,508 million VND, equivalent to 26.7%, in 2015, it reduced 4,851 million VND, equivalent to 7.25% compared to 2014 This is the lowest decline in years because this is also the time when credit balance is at the lowest level By 2016, Agribank's income increased to VND 30,587 million, equivalent to 49.2% and by 2017 Agribank's income reached the highest level, higher than that of 2016 of VND 4647 million, equivalent to 15.2 % As reported by Agribank, 43% of TDVM outstanding loans are eligible for insurance Regarding the number of micro insurance services provided by Agribank, there were previously two main services: Credit Security and Agricultural Insurance, but at the present time, Agribank only provides credit security The number of Agribank's general agents, points of sale, agents of Agribank in the last years has increased This is a good signal at the moment but in the future, the bank can continue to exploit its strength to widely deploy the number of services, increase customer access and increase income The number of General Agents is concentrated in big cities such as Hanoi, Ho Chi Minh City, Hai Phong, Khanh Hoa, Can Tho, Dak Lak, Thanh Hoa, Phu Tho, and the selling points are Branches and transaction offices are set up on 703 Districts / Towns in 64 provinces and cities Despite the coverage of the points of sale throughout the country, but Agribank needs to continue to exploit its large market further to continue to promote its social mission in the field of "three farm" Agents of micro insurance services are employees of Agribank who are trained through professional classes organized by banks By the end of 2017, Agribank has organized 355 training courses for 34,286 employees of Agribank, issued agent certificates to more than 18,000 Agribank officers who are qualified to act as insurance agents in accordance with the law Previously, Agribank provided two main services: Credit Security and Agricultural Insurance, but until now, Agribank only provides credit security The number of Agribank's general agents, points of sale, agents of Agribank in the last years has increased This is a good signal at the moment but in the future, the bank can continue to exploit its strength to widely deploy the number of services, increase customer access and increase income The number of General Agents is concentrated in big cities such as Hanoi, Ho Chi Minh City, Hai Phong, Khanh Hoa, Can Tho, Dak Lak, Thanh Hoa, Phu Tho, and the selling points are Branches and transaction offices are set up on 703 Districts / Towns in 64 provinces and cities Despite the coverage of the points of sale throughout the country, but Agribank needs to continue to exploit its large market further to continue to promote its social mission in the field of "three farm" The agent of the Security Service is the staff of Agribank who are trained through professional classes organized by the bank By the end of 2017, Agribank has organized 355 training courses for 34,286 employees of Agribank, issued agent certificates to more than 18,000 Agribank officers who are qualified to act as insurance agents in accordance with the law 3.3.2 Results of credit service quality inspection through survey of customer satisfaction 3.3.2.1 Analyzing factors of discovery of EFA 3.3.2.2 CFA confirmatory factor analysis 3.3.3.3 SEM linear structure analysis Table 3.14: Conclusion table of research hypotheses No Research hypothesis Conclude Utility products have a positive impact on customer satisfaction Accept Interest rate policy has a positive impact on customer satisfaction Accept Customer care policy has a positive impact on customer satisfaction Accept The level of reliability has a positive impact on customer satisfaction Accept Empathy has a positive impact on customer satisfaction Rejected Service capacity has a positive impact on customer satisfaction Accept Tangible means have a positive impact on customer satisfaction Rejected From the above analysis shows that: The influencing factors in descending order of importance are: Serving capacity, interest rate policy, customer care policy, product utilities & services service and reliability 3.3.3 Research results on factors affecting the decision to use micro savings service 3.3.3.1 Analysis of EFA discovery factors 3.3.3.2 CFA confirmatory factor analysis 3.3.3.3 Evaluate convergence value 3.3.3.4 SEM linear structure analysis Table 3.24: Conclusion of research hypotheses No Research hypothesis Conclude The bank brand has the same influence on the Customer's decision to send micro savings Accept The interest rate policy has the same impact on customers' decision to send micro savings Rejected The distribution channel has the same impact on the customers' decision to send micro savings Accept Quality of service has the same impact on the customers' decision to send micro savings Accept After-sales program has the same impact on customers' decision to send micro savings Rejected Through analysis and evaluation of the survey questionnaires on the decision to use micro savings service, the impact factors according to the reduction level are: Distribution channel, bank brand and service quality: 3.4 Assessing the real situation of developing microfinance services of Agribank 3.4.1 Results achieved Through research on the current status of development of microfinance services of Agribank in the period of 2013 - 2017, Agribank has achieved some following results: Firstly, Agribank maintains its core values, its mission is to provide financial support to the poor, especially poor women, contributing positively to promoting the role of women in families and communes and promote gender equality Secondly, the bad debt ratio of micro credit in 2017 is low at about 1% Thirdly, through the provision of micro-saving services of Agribank, it helps households, poor people, in the immediate future to have a habit of accumulating money, and then know how to plan and take initiative more in the use of money whether it is small denominations Fourthly, Agribank as an agent providing micro insurance products has ensured customers of Agribank and their families more stable when encountering risks, uncertainties in life, Fifth, through non-financial services, Agribank's customers have more life skills and experience in using loan capital effectively to develop production, increase production and improve improving the quality of life, rising out of poverty, 3.4.2 Some limitations and causes 3.4.2.1 Some limitations: products are not diversified; methods of service provision are not diversified; model of organization of management of unfinished microfinance services, 3.4.2.2 Causes * Group of subjective causes: awareness of operational development is not clear, there is no right attention about the development of microfinance services; Human resources of Agribank have not met the development needs; risk management capacity is not high; Financial potential has not met the requirements for development * Group of objective causes: the causes of the legal environment; causes of social environment CHAPTER 4: ORIENTATION AND SOLUTIONS FOR DEVELOPING MICROFINANCE FINANCIAL SERVICES OF VIETNAM BANK FOR AGRICULTURE AND RURAL DEVELOPMENT 4.1 Development orientation of microfinance services of Agribank 4.1.1 Development orientation of banking industry and microfinance services in Vietnam period 2019-2025 4.1.2 Development orientation of Agribank Implementing the business strategy in the period of 2016-2020, vision of 2030, Agribank aims to maintain the position of the leading commercial bank in Vietnam, operating under the state-controlled model of shares (the State must keep the stock a minimum of 65%); has a technology foundation, modern management model, high financial capacity; versatile, safe, efficient, stable and sustainable business development; well perform the core and key tasks of micro-credit supply and banking utility services in the field of agriculture and rural areas: 4.1.3 Agribank SWOT analysis in developing microfinance services in the coming years Based on the assessment of Agribank's strengths and weaknesses, as well as considering the current opportunities and challenges from the financial operating environment in the context of the 4G revolution, we have a SWOT summary table like later on Agribank Table 4.1: Agribank evaluation according to SWOT model Strength Weakness S1: is the largest commercial bank in terms of equity W1: has not met the minimum capital adequacy ratio; financial S2: has a particularly important position in the country'ssustainability is not high economic development; play a key and key role in the ruralW2: The organizational model at the Head Office is not financial market streamlined and effective S3: has the position, prestige and brand of a leadingW3: branch network system in urban areas has not been arranged commercial bank with a long history of operation and planned in the direction of ensuring W4 efficiency: products S4: has absolute strength in distribution channel network and services are not yet diversified S5: has modern information technology infrastructure W4: technology applications have not been fully developed S6: versatile, multidisciplinary, multi-sector business W5: Agribank's competitive advantage has not been fully S7: a large staff, through experience and experience exploited W6: lack of well-trained staff Opportunity Challenge O1: Vietnam integrates more and more deeply into the worldT1: Vietnam's economy is integrating more and more deeply into economy the international economy O2: the rapid development of scientific and technical advances T2: Loosen operating conditions for foreign banks following O3: Vietnam's economy always has a high growth rate Vietnam's WTO accession commitments O4: Vietnam has a stable and safe political environment T3: competitors, especially joint stock banks, are increasingly O5: The Government continues to affirm its policy of reformactive, flexible and responsive and accelerate the equitization process of state-ownedT4: replacement products of banking services are increasingly enterprises completed and become "heavyweights" O6: The Government has approved the non-cash paymentT5: foreign banks and joint stock banks pay special attention and scheme make huge investments for the improvement of products and services 4.1.4 Orientation for developing microfinance services of Agribank Based on the above SWOT model, it is possible to summarize the strategic orientations for Agribank in developing microfinance services in the coming time as follows: Development strategy SO (maxi - maxi): Continue to focus on the market of microfinance market, make the most of the network, develop comprehensive cooperation with other credit institutions in the same area on the principle of average equality, mutual benefit; Select and invest in appropriate technology with reasonable prices to develop diversified activities, diversify approaches for customers to better meet customer needs; Strengthening investment entrustment activities and entrusting loans for programs / projects, agency activities, expanding household management of digital financial agents for other units Competitive strategy WO (mini - maxi) :: Expanding customers when allowed by law, providing more diverse products to different customer groups, segmenting the market in detail by group ; Enhancing financial potential through the utilization of people's savings resources; Actively improve the quality of human resources in terms of quality and quality, improve and improve the quality of operations through training, joint ventures, technology transfer, application of modern technology Gradually apply safety standards and basic regulations of the bank according to practice Anti-ST strategy (maxi - mini): Take advantage of deep and close understanding of customers, develop ideas to have diverse products to have different sources of revenue, thereby strengthening edge painting, increasing interest and noninterest, gradually approaching to ensure financial autonomy; Provide reasonable policies, term, interest rate, support for poor people and policy beneficiaries to develop against negative impacts of integration; Agribank adopts the common voice of the board of directors, political and social organizations to implement PR, lobbying for functional agencies to adjust the legal provisions to suit the operation WT defense strategy (mini - mini): Establish a "defensive" plan to avoid weaknesses that are severely impacted from the outside environment In the case of weak internal potential and unfavorable external conditions, Agribank needs a wise strategy to minimize both 4.2 Some solutions for developing micro-finance services of Agribank Based on the theoretical basis of the development of microfinance services, lessons learned from the development of microfinance services of a number of foreign banks, the conclusion of the situation of the quality of microfinance services, limitations, the cause of restrictions in delivery 4.2.1 Complete strategies, policies and procedures for providing microfinance services Although Agribank has a strategy to develop microfinance services, it is unclear, so Agribank needs to properly recognize the role of researching and developing strategies to develop these services in a professional manner Agribank's strategy to develop microfinance services needs to harmonize the relationship between business activities that bring high income and social responsibility activities In addition, measures to increase the effectiveness, effectiveness of strategies, policies and processes, Agribank needs: - Complete the model of microfinance service management organization The organizational model of Agribank when converted into a Banking - Finance group is still oriented: taking advantage of a wide network to develop retail banking services, improving financial capacity and developing prices brand treatment on the basis of promoting and combining corporate culture; meeting the requirements of agricultural and rural production restructuring; expand and improve the quality of competitive banking services; focus on investing, training human resources, innovating banking technology towards modernization, competitiveness and integration Agribank needs a specialized department for microfinance activities This department is responsible for designing microfinance products and services, periodically reporting statistics on the process of operation, monitoring, accounting, adjusting issues of products and processes customer analysis and product pricing, risk management - Quality communication of service development throughout the system - Standardization of business process: To implement risk management before happening, Agribank needs to review all business processes, implement standardization process according to specific steps 4.2.2 Diversifying and improving the quality of microfinance products and services on the basis of modern information technology, meeting increasingly diverse needs of customers a, Diversify traditional financial services - For existing services, Agribank needs to review the process of each service to ensure strict consistency, but flexibility in meeting customer needs, improving the skills and expertise of the staff Ministry of finance, improve customer information management Transaction costs for customers need to be reduced to the maximum, especially for credit products The professional procedures of Agribank need to be simple and standardized; implementing loan approval on the basis of specific criteria and easy implementation Strengthening problem debt management, thoroughly resolving existing bad debts and preventing bad debts from happening by professional measures, avoiding risk spread Reduce time for money transfer and payment through the banking system For micro savings service: different types can be applied: savings can only be withdrawn at the end of the term and at the end of the term but with high interest rates; savings can be withdrawn with interest rate or deposit interest rate; non-term savings or automatic short-term transfer according to customer requirements; saving deposits; savings with property management services For microcredit services, Agribank can also diversify to suit the needs of each customer group In addition to the current popular lending method, it is possible to expand loans according to limits and circulation loans Loans based on third-party guarantees or unsecured credits should be considered for development due to the characteristics of collateral in rural areas often with low liquidity The consumer lending segment in rural areas also needs to be developed and diversified Credit products that meet consumer demand are now becoming very attractive such as residential consumer loans, media investment loans, student loan payments, loans to meet Short-term essential needs such as weddings, funerals, medical treatment If the customer complies with the terms of the credit or savings agreement, material incentives (gifts, money) or spirit (certificates of merit, thank you, etc.) should be taken b, Developing new financial services, especially products and services with information technology applications The process of building and developing new financial services of Agribank needs to be tested and adjusted at a pilot facility before being widely deployed Some services may be developed gradually or need to be available according to market demand: Credit services and new savings, payment, money transfer, life insurance, health insurance, insurance crop insurance, pension fund, other intermediary activities: asset management, security services With micro-credit services, Agribank can try to apply financial leasing, discounting negotiable instruments, guarantees for production and business households For payment services, development of payment services is a great opportunity for Agribank to diversify its operations, increase customer attraction, increase revenue, and also be an incentive for Agribank to invest deeply in the company hardware software technology, cooperation with other financial institutions at home and abroad The simplest payment product is money transfer, which needs to be tested first Agribank needs to consider the scale of operation and current capital with market demand for this product For other payment products such as ATM cards, debit cards, credit cards, which require large investments in technology, Agribank needs to closely link with other MFIs from the beginning in investing in machinery and parts Soft, connected to expand the scope of service and market share rather than direct competition, both wasting resources and ineffective Micro insurance service: Agribank with its available advantages is a huge number of branches, has the opportunity to develop the next micro insurance services products in parallel with Ngan's support programs The World Bank, Asian Development Bank, is trying to bring these products to market In order to deploy new services, Agribank needs: Actively research appropriate products; actively participate in advocacy to clarify the great potential of the market; improve knowledge of products to advise customers about micro insurance services in accordance with the capabilities and characteristics of organizations and customers, risks in the region; openly, transparently in collecting fees, supporting insurance payments for customers under an agent's perspective The provision of high-tech products such as banking via mobile phones, Internet banking brings many conveniences for users to enhance the competitiveness of Agribank with other MFIs c, Development of non-financial services Agribank can choose one or several support services groups such as business development services group (knowledge training on production, trade, marketing, etc.), social intermediary services group (training management, cohesion, social capacity building), forestry and fishery extension services, advice, technical assistance, Agribank needs to well the following: Research and evaluate the provision of non-financial services according to multi-dimensional poverty standards, the financial strategies that the poor are using, they can be improved skills in which direction and opportunity to provide non-financial services as well as promote financial management skills education; Developing teaching materials and textbooks for training at two levels; Develop indicators to assess output and the impact of providing non-financial services and educating household financial management skills 4.2.3 Develop methods of providing microfinance services The method of service provision of Agribank often via traditional channels is direct borrowing at branches, transaction offices, recently mobile banks, if economic conditions develop, Agribank can expand access channels to electronic customers such as home - banking, phone banking, even e - banking Group trading method - the form of providing financial services through mutual support groups proves to be very suitable and needs to be further promoted In the coming time, Agribank needs to focus on consolidating and reorganizing the operation of savings and loan groups, improving the quality of the group's activities, conducting assessment and classifying savings and borrowing groups according to documents agreed with each socio-political organization Regularly analyze and develop debt recovery plans, handle outstanding debts to each loan Resolutely handle cases of abuse, aggression, borrowing to avoid lending through groups, but the responsibilities of group members are not clear, commission fees are too low, or only charged form 4.2.4 Developing the quantity and improving the quality of human resources According to the leading experts in the banking and finance industry, the quality of human resources in Agribank is currently quite high compared to other commercial banks, but to develop microfinance services in the future, the quality of human resources is Currently, Agribank is still one of the major obstacles Therefore, improving the quality of human resources mainly through developing infrastructure for professional training and management plays a very important role Trainees should focus on (i) officers who are directly involved in financial services at all levels (such as credit officers, accountants, capital mobilization officers, officials) Statistics, reports, ), and (ii) the leadership team, focusing on the board of directors and board chairman In order for the training to be successful, it is necessary to carry out training in parallel with practice, training of trainers (TOT - training of trainers), especially local TOTs is best The training should be through many appropriate forms, focused training, on-the-job training, exchange of experiences of other commercial banks that provide microfinance services 4.2.5 Develop the ability to apply banking technology to the development of microfinance services Agribank needs to pay attention to regularly collecting information, updating information about current customers as well as potential customers; collect more information about economic, political, social environmental factors Agribank can collect information by using reliable official sources, according to certain standards and information indicators; or outsource if conditions permit In the current period of information technology development, Agribank is fully qualified to apply it to banking operations to manage information and extract microfinance information as required by Related parties easily 4.2.6 Some other solutions 4.2.6.1 Enhancing financial potential Strong financial potential is the basic basis for Agribank to strengthen its reputation, expand and improve the quality of its operations Agribank needs to pay attention to healthy and quick financial capacity quickly and fundamentally as soon as possible, as the time to implement international commitments in the field of "three farm" is close Specific solutions to enhance financial potential include: a Increase the scale of charter capital Currently, Agribank is one of the largest banks in Vietnam in terms of total assets and charter capital, but this level of capital is too small compared to regional banks Gribank is state-owned so there are many ways to increase capital: the State allocates additional budget; Re-evaluate the value of fixed assets and investment; Continue to issue more convertible bonds; using funds such as financial reserve fund, reserve fund to supplement charter capital, retained profits to increase charter capital to the maximum extent possible; quickly equitization carried out according to Agribank equitization project which was requested by the Prime Minister to be completed in 2008 but has not been successfully implemented b Improve the quality and profitability of assets c Finalize debt balance and clean balance sheet 4.2.6.2 Strengthening risk management capacity Potential risks for Agribank focus on two types of credit risk and liquidity risk Strengthening risk management capacity to help Agribank operate safely and sustainably, increase its reputation and ability to expand its operations in the microfinance sector Solutions to enhance risk management capacity of Agribank include: - Increasing awareness of risks and risk management: On the overall level, Agribank needs to strengthen internal control checks to prevent risks, identify risks; diversify investment portfolios to share risks (although this is more difficult in rural areas than in urban areas) - Thoroughly dealing with losses: For the risk-debt handling mechanism, it should also be revised to suit the reality in the direction of having policies to support borrowers after risks At the same time, strengthening the responsibility for lower-level branches in the implementation of handling debt risk in the direction of decentralization and force majeure risks, the Agribank system will "shoulder" and risks due to The organization itself can be overcome, it must be done right from the lower level Agribank can also use tools such as credit risk insurance, risk provisioning, using derivatives if possible 4.3 Some recommendations 4.3.1 With local authorities and socio-political organizations mass organizations and professional organizations Supporting commercial banks on personnel and officials; supporting commercial banks in terms of facilities, working offices, working facilities; support commercial banks in propaganda and mobilization 4.3.2 With the State Bank of Vietnam Expeditiously implement activities in the framework of Vietnam Microfinance Development Strategy; Create a healthy competitive environment among organizations providing MFIs; Improve the capacity of the State Bank staff through training of microfinance knowledge, skills of financial analysis, inspection and supervision for microfinance activities; Promote propaganda on guidelines, policies and laws of the Party and State related to microfinance; Universalizing knowledge about microfinance for objects in the industry as well as the whole society 4.3.3 With the Ministry of Finance Expeditiously formulate and promulgate circulars guiding legal documents of superior state agencies, perfecting the documents of the Ministry being applied; Working closely with the State Bank of Vietnam in creating a legal framework as well as managing commercial banks and microfinance services provided by banks Limiting to the maximum the appearance of overlapping and even conflicting legal documents between the two agencies - which makes it difficult to implement the objects of management; Research, propose and proceed to develop appropriate legal regulations for the microfinance services sector to facilitate this service to develop in a professional direction, contributing to the development of the microfinance industry; Research, propose and develop different tax policies 4.3.4 With the Government Continue to direct the SBV to coordinate with related units to develop a microfinance development strategy in the direction of supporting the professional and sustainable development of microfinance, gradually integrating microfinance into the financial and banking system national goods; Directing research, summarizing practices to continue improving the legal framework for microfinance industry in Vietnam in general and commercial banks in particular The special urgent issue now is to amend the regulations related to the creation and management and administration of commercial banks that provide microfinance services in a more reasonable way, creating more favorable conditions CONCLUSIONS On the basis of synthesizing the qualitative and quantitative research methods, in the chapters of the thesis, the PhD student has performed the research tasks, specifically: Firstly, analysis and evaluation of published works by domestic and foreign authors, from which point out the limits and research gaps to create a basis for identifying subjects and scope of research topics thesis Secondly, establishing a theoretical basis for the development of microfinance services in accordance with the approach of specialized business sectors such as: basic arguments about microfinance services such as: concepts, classification, service providers, the importance of microfinance services provided by commercial banks, the basic contents of developing microfinance services of commercial banks such as the concept; service development content, criteria for evaluating the development of services through qualitative and quantitative indicators; the factors (subjective, objective) affect the development of microfinance services of commercial banks and through understanding the experiences of countries with similarities in the process of providing microfinance services As the Bank for Agriculture and Agricultural Cooperatives of Thailand, Grameen Bank in Bangladesh, Rakyat Bank in Thailand, CARD Bank in Philippines, NCS has drawn lessons and can be applied to Agribank next time Thirdly, introduce about the process of formation and development of Agribank over 30 years of construction and some basic financial indicators of Agribank for years from 2013 to 2017; analyzing the status of deploying the contents of developing microfinance services of Agribank through development methods, management methods, analyzing service development results through criteria of service scale and the number and assessment of customer satisfaction when using microfinance services for years of research, thereby assessing the achievements, limitations and causes of the above limitations Fourth, analyze and interpret the opportunities and challenges, advantages and disadvantages of Agribank in the development of microfinance services in the coming years and the thesis also determines the development of service activities banks including microfinance services From there, analyze and interpret groups of solutions to promote the development of Agribank's microfinance services in the coming time and propose some recommendations to related ministries and agencies such as: local government level and socio-political organizations, the State banks, the Government, the Ministry of Finance, etc so that the solutions can be best implemented In addition to the outstanding achievements mentioned above, with research conditions having many limitations, the thesis still has two issues that have not been thoroughly solved as follows: Firstly, because Agribank currently does not have any documents specifying the services: micro-credit, micro-savings, micro-insurance, so the access to data and analysis is difficult (For microcredit, the PhD student must use Circular No 07/2009 / TT-NHNN for general MFIs to separate data, ) Secondly, the time of survey data is not long, the sample selected is random and convenient so it does not guarantee the representative for microfinance activities at Agribank Therefore, the drawn conclusions may not reflect fully the reality of Agribank's development of microfinance services Stemming from these limitations, in the future with more favorable research conditions, the researchers expect to pursue more specific research directions at Agribank such as: Developing microcredit services , developing micro savings service or developing micro insurance service of Agribank Because the research capacity is still limited, the dissertation certainly has many shortcomings, Fellows hope to receive the contributions of scientists, teachers, and readers in general so that the thesis can be completed more current PhD student sincerely thank you! ... development of Vietnamese banks Dr Dao Van Hung, (2005), "Developing microfinance activities in Vietnam", Nghi Hong Son (2006), in the research paper "Efficency of rural Financial in Vietnam: Evidence... number of micro savings services: designed in general with other services including: Term savings, Flexible savings, Floating rate term savings deposit, Deposit savings Periodically, Savings deposits... offices in Vietnam, the fact that Agribank has not provided micro payment services is really a waste, not commensurate with internal force his availability * Non-financial services In Vietnam''s microfinance
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