Foreign Trade University
Finance and Banking
MIDTERM INTERSHIP REPORT
PROCESS FOR LOANS AT BRANCH BANK FOR AGRICUTULURE AND
RURAL DEVELOPMENT BADINH – THANH HOA
Supervisor: Ms. Nguyễn Đình Đạt
Name: Hoàng Thị Thu Hương
ID: 1111340207
Class: A21 CLC TC-NH
1
Menu
Introduction............................................................................................................4
1. Overview about Branch Bank for Agriculture and Rural
Development Ba Dinh - Thanh Hoa:..........................................................5
1.1.
Overview about Bank for Agriculture and Rural Development:
5
1.2.
Introduction about Branch Bank for Agriculture and Rural
Development Ba Dinh - Thanh Hoa..........................................................6
1.2.1.
Overview about Agribank Ba Dinh - Thanh Hoa:....................6
1.2.2.
Establishment and development of Agribank Ba Dinh:...........6
1.3.
Organizational structure:....................................................................7
1.3.1.
Board of Directors:.........................................................................7
1.3.2.
Accounting – Funding Department:.............................................8
1.3.3.
Credit – Business Planning Department:....................................8
1.4.
Activities and services:.........................................................................9
2. Internship process:........................................................................................11
2.1.
Target:...................................................................................................11
Learn about the loan process, the actual implementation of the
lending process.............................................................................................11
2.2.
Internship process:..............................................................................11
2.3.
Achievement.........................................................................................11
3. Process in bank lending...............................................................................12
3.1.
Basic lending process.........................................................................12
3.1.1.
Receiving Customer Advisory loan documentation...............12
3.1.2. Test records of customer loans, evaluation and appraisal
reports for lending...................................................................................13
3.1.3.
Loan approval................................................................................14
3.1.4.
Complete documents and contract.............................................15
3.1.5.
Check, control documents and disburse:..................................15
3.1.6.
Withdrawal of principal, interest and other costs incurred
16
2
3.2.
Lending situation:...............................................................................17
3.3.
Appraise:...............................................................................................21
3.3.1.
Advantages:....................................................................................21
3.3.2.
Restrictions....................................................................................22
4. A number of measures to improve............................................................22
4.1.
Banking Solutions:..............................................................................22
4.2.
Recommendations to the State Bank and the competent
authorities.....................................................................................................23
Conclusion.............................................................................................................24
3
Introduction
Lending activity is the main activity provides income to the bank. Therefore,
the effect of lending activities contribute significantly to the income of the
Bank. Bank of Agriculture and Rural Development is no exception. The
development,
improvement
the
lending
process
is
indispensable
in
maintaining the leading position of Agribank.
By the way, the banking sector is facing stiff competition. Measures to
attract customers repeatedly given. Besides the interest factor, the simplified
procedure are also interested.
So I chose the topic "Process for loan at Branch Bank for Agriculture and
Rural Development Ba Dinh - Thanh Hoa"
The report consists of four parts:
1. Overview about Branch Bank for Agriculture and Rural Development
Ba Dinh - Thanh Hoa
2. Internship process
3. Process for loan at Branch Bank for Agriculture and Rural
Development Ba Dinh - Thanh Hoa
4. The measures to improve the process for loan at Branch Bank for
Agriculture and Rural Development Ba Dinh - Thanh Hoa
4
1. Overview
about
Branch Bank
for
Agriculture and Rural
Development Ba Dinh - Thanh Hoa:
1.1.
Overview about Bank for Agriculture and Rural Development:
Agribank is the largest bank in Viet Nam in terms of capital, assets,
workforce, operating network and customer base. As of October 2013, the
leading role of Agribank has been confirmed by:
Total asset: VND 671,846 billion
Total fund resource: VND 593,648 billion
Equity: VND 29,605 billion
Total outstanding loans: VND 523,088 billion
Operating network: 2,400 branches and transaction office nationwide
Personnel: 40,000 staffs
Agribank is the first bank to accomplish the Project “Intra Payment and
Customer Accounting System” (IPCAS) funded by the World Bank. The
finalized IPCAS has enabled Agribank to provide local and foreign
customers with modern banking products and services with extensive
safety
and
accuracy.
At
present,
Agribank
is
serving
millions
of households and enterprises.
Agribank is one of the banks in Viet Nam who have the largest number of
correspondent banks with 1,026 correspondent banks in 92 countries and
territories.
Agribank is currently taking the Chairmanship of Asia Pacific Rural and
Agricultural Credit Association (APRACA) in term of 2008-2010, and
also a member of International Agricultural Credit Confederation (CICA)
and Asian Bankers Association (ABA). Agribank has hosted a number of
big international conferences, i.e., FAO Conference in 1991, APRACA
Meeting in 1996 and 2004, CICA International conference on agricultural
credit in 2001, APRACA Meeting on fishery in 2002.
Agribank is the leading bank in Viet Nam in receipt and implementation
of foreign projects. In the context of economic volatility, Agribank has
received 136 projects from the World Bank (WB), Asian Development
Bank (ADB), French Development Agency (AFD), European Investment
Bank (EIB), etc. with the total fund of over USD 5.1 billion. Apart from
this, Agribank has continuously got accessed to and attracted new
5
projects: Financing Agreement with European Investment Bank (EIB)
phase II; Rural Finance Project III funded by World Bank, Biogas Project
funded by ADB; JBIC Project by Japan; Small rubber farming project
funded by AFD.
With the position of a leading commercial bank in Viet Nam, Agribank
has shown its great efforts, reaching encouraging achievements, and
contributing greatly to the nation’s industrialization and modernization as
well as economic development.
1.2.
Introduction about Branch Bank
for
Agriculture and Rural
Development Ba Dinh - Thanh Hoa
1.2.1. Overview about Agribank Ba Dinh - Thanh Hoa:
Full Name: Branch Bank for Agriculture and Rural Development Ba Dinh
- Thanh Hoa
Abbreviation Name: Agribank Ba Dinh-Thanh Hoa
Head office located at: 109 Dinh Cong Trang - Ba Dinh Ward - Thanh
Hoa City
Agribank under Agribank Ba Dinh, Thanh Hoa, located in the system
Vietnam Bank for Rural Development, with headquarters at 109
transactions Dinh Cong Trang - Ba Dinh Ward - Thanh Hoa City.
1.2.2. Establishment and development of Agribank Ba Dinh:
Agribank Ba Dinh is a 2-level branch was established and officially went
into operation in 2000, on the basis of the Branch level 4 5 and 6 should
be merged functional and complete tasks than the old branch, right
judgment about granting credit greater.
Over the past 10 years of operation and Development Branch Bank for
Rural Ba Dinh has seen stable growth in both scale and scope of
operation, financial strength ... Bank continuously maintained its position
as one of the outstanding work in the system Agribank Thanh Hoa. Bank
branches not stop at the scale of operation of a small branch that was
headed for the big branch model developed diversified products and
services effectively. The stable development with high growth rate helped
Branch Bank for Rural Ba Dinh have the confidence of customers.
1.3.
Organizational structure:
Figure 1.1: System management apparatus of Ba Dinh Branch Bank for
6
Director
Deputy
Director
Accounting
–
Credit
Funding
Business
Department
Department
–
Plan
The function of each part:
1.3.1. Board of Directors:
Executive programmatic work plan monthly, quarterly and annually
according to the regulations of the Bank for Rural Development in Thanh
Hoa Province.
Consisting of 3 people:
- 1 Director:
General Manager, in charge of the organization.
Operational management of the business to ensure revenue targets in
services, revenue from capital mobilization, sustain growth and indicators of
credit quality.
Improve influence and prestige in the area of bank operations.
-
2 Deputy Directors:
Support manager in the construction and operation of the organization
transaction.
7
Manage and administration activities as assigned and delegated direct
transaction manager.
1.3.2. Accounting – Funding Department:
Directly accounting and payment under the provisions of the State Bank,
Agribank Vietnam.
Develop a financial plan targets annual Rural Bank for the approval of
Thanh Hoa Province.
Management and use of funds specialized in the area as prescribed.
Synthesis, storage records and documents on accounting and settlement of
other reports as required, perform remittances statutory budget. Management
and use of equipment.
Department of 8 people:
-
1 Chief Accountant
2 Deputy Accountants
3 Accounting transactors
1 Treasurer
1 Fund auditor
1.3.3. Credit – Business Planning Department:
Make propaganda duty, receive loan applications of individual customers
and businesses.
Conduct evaluation of loan terms and settlement loans in the ruling powers
of the transaction to the transaction manager lending decisions.
Complete documents, a preliminary evaluation of the loan exceeds the
jurisdiction of the transaction to the Branch Director.
Synthesis and analysis of information management, reporting on the work of
the credit for the competent authorities of the operational capability of its
parts.
Department of 8 people:
8
- 1 Manager.
- 2 Deputy Managers.
- 5 Credit Transactors
1.4.
Activities and services:
The main activities:
- Deposits of organizations, individuals and other credit institutions
under the form of term deposits, term deposits and other deposits;
promissory notes to raise funds from organizations and individuals.
- Short-term loans, medium term and long term for legal entities and
individuals, households, cooperatives, private enterprises, partnership
in order to meet all the demands except capital needs where prohibited
by law.
- To guarantee operation: loan guarantees, payment guarantees, bid
guarantee, performance guarantee contracts and other guarantees.
- Foreign currency trading.
- Payments in national money transfer system electronic funds transfer
and international payments via SWIFT network.
Services:
-
Account deposit
Credit
Domestic payments
International payments
Business exchange
Card services
Remittance services
Other services
9
2. Internship process:
2.1.
Target:
Understand the basic characteristics of the work environment, namely banks.
Observe how the rules work as well as bank
Learn about the loan process, the actual implementation of the lending
process.
2.2.
2.3.
Internship process:
Achievement
10
3. Process in bank lending
3.1.
Basic lending process
Lending process in sequence: Appraisal before loan - Inspection and
supervision while lending - Checking, monitoring, retrieval, processing loan
debt after lending
The specific sequence of these steps are:
Step 1: Receipt, advises clients loan documentation
Step 2: Verification of conditions for borrowing, investment, loan plan
Step 3: Consider and approve loan
Step 4: Complete documents and signed contracts
Step 5: Test, control and disbursement records
Step 6: Withdrawal of principal, interest, and costs incurred treating the
Step 7: Liquidation of contract and mortgage credit assets secured
3.1.1. Receiving Customer Advisory loan documentation
For first-time customer transactions, carry out registration information and
transaction codes to customers, provide product portfolio, service, receiving
a written request for a loan, customer guidance documentation procedures to
register to use the service.
Ministry of loan applications, including:
-
Legal documents
Loan portfolio profile
Papers relating to the loan collateral
For customers of each transaction, receive loan request, additional guidance,
finishing the record, guiding customers to purchase insurance
In addition to the information provided in the profile, credit officers to
collect information on capacity management, production methods, business
11
and financial resources, the product can be used, loan demand, loan purpose,
repayment sources and other requirements
3.1.2. Test records of customer loans, evaluation and appraisal reports
for lending
Receiving and checking records of customer loans
In case of insufficient records, client proposals correct, supplement or
complete
In case of loan records and does not meet the conditions stipulated by the
establishment Agribank loan rejection notification, sent to the customers.
In case of loan conditions, loan application meets the provisions of
Agribank, credit officers will conduct registration information into the
system, report manager business plan. After obtaining the approval of the
Head, conducting an evaluation report
Evaluation and appraisal reports for lending
Pursuant to the loan documents provided by customers, the survey, gather
information, credit appraisal officer with the following contents:
To evaluate the capacity of civil law, civil act capacity under the law: a legal
appraisal records, assess civil legal capacity and capacity for civil acts of
the customer or representative action.
Appraisal purpose loans: loan review purposes in violation of the law and
consistent with business license
To evaluate the ability, financial strength of the customer: compare, analyze
and evaluate data, comparing records with practice, investigation, survey
agencies, financial viability assessment customer.
To evaluate the feasibility and efficiency of investment projects, production
plans, business analysis, evaluating the customer before making an
investment project, plan business plan; evaluation plans, project loans in
12
many aspects such as technical aspects, market aspects, financial aspects,
management aspects, environmental aspects, economic aspects of benefits social, aspects of risk.
Evaluating the loan guarantee: check paper records secured assets and
compare them with the current rotation, check the real situation of these
assets in, the ability to recover the debt if the property must be handled
collateral, valuation of assets to determine the loan. In the case of collateral
or third party guarantee is to assess the capacity of the third party and the
ability to fulfill the obligations of the guarantor.
Evaluation of customer relationship with the bank and the bank is entitled to
benefits.
Prepare appraisal reports for lending
3.1.3. Loan approval
Get the records and evaluation reports of credit officers, Head / credit team
leader is responsible for reviewing loan applications portfolio pursuant to
the provisions of Agribank of Vietnam; if the loan file missing, incomplete,
additional requirements and complete.
In case the necessary information can be collected and re-evaluation of one
of the following: Verify the status and rank of borrowers; The credit limit
for customers, customer groups; risk assessment of the project, loan plan,
risk assessment of loan security, risk assessment of interest, determine the
liquidity risk might occur, evaluate the foreign exchange risk , comments on
other risks.
Based on records by the Credit Department - Business Plan or the loan
officer, branch manager for consideration and decision to approve the loan.
Where the loan exceeds jurisdiction of Branch Manager: If you qualify for a
loan and agreeing Branch prepare reports and documents attached to the
13
Agribank loan immediate superiors to consider approval of the project
borrow.
Time appraisal, loan decision: To comply with current regulations of
Agribank.
3.1.4. Complete documents and contract
Complete draft contract: Contract credit, loan guarantee contracts are made
in the form issued by the Vietnam Agribank. Pursuant to the loan approval
decisions and agreements with customers, staff conduct credit record, edit
the content fully as required and agreed upon in a credit contract, contract
security for loan.
Contract Signed: Head check the terms of the credit agreement, loan
guarantee contracts in accordance with the contents of the agreement in
accordance with the laws and regulations of Vietnam Agribank.
Director of Agribank lending to review the content on the contract for
approval.
After the director of Agribank signed on loan where credit agreement, loan
guarantee contracts, credit officers client requests for authentication of the
loan guarantee contract, in coordination with the department complete the
relevant procedures for receiving, storage, deposited ... collateral.
3.1.5. Check, control documents and disburse:
After the client has completed, additional records as required or notarized,
authenticated, secured transactions registration and warehoused or deposited
assets (if the loan secured by the property), staff receive credit profile, last
checked.
If ensure full and proper implementation of the requirements, enter the
necessary information into the system IPCAS (loan amount, term and
principal
repayment
rates,
loan
interest
rates,
repayment
periods
eventually ...) and collaboration with relevant staff disbursed.
14
After the manager approves loan, credit officers perform enter the following
information: the loan amount, interest rate, term and repayment of principal
repayment and interest ... information security assets loan.
Before
disbursement
requests
to
sign
on
customers
debentures
or
addendums.
Make keeping the loan application under the provisions of Agribank of
Vietnam (refer Appendix 8).
3.1.6. Withdrawal of principal, interest and other costs incurred
During the loan, must always check tracking and loans. Personnel assigned
to track loans with responsibility to monitor and supervise the repayment of
principal and interest of the customer in full and on time. The debt limit
must be set up to send notifications to customers over 05 working days prior
to the maturity date of debt.
Principal, interest and costs based on:
-
Repayment period of principal and interest as agreed with the
-
customer in them p credit agreement.
Approval of the competent person for the performance incentives (if
-
any).
Interest rates and fees agreed in the credit agreement.
Amount past due, overdue interest and overdue time (if any).
After collecting principal, interest and fees, transaction must update to the
debentures or addendums credit and collection system of the amount
prescribed by the Vietnam Agribank.
3.1.7. Liquidation of mortgage contracts and collateral
Liquidation of contract: When customers pay off the principal, interest and
fees, transaction must collate, check data between paper documents and
accounting system for all loans. When customers pay off the principal,
interest and fees, the credit contracts expire naturally (except for loans
under the mode of credit limit), the parties do not need to make a record
15
liquidation of the credit agreement. As for the method of lending credit
limit, when customers pay off debt and debentures on the credit limit of the
expiry of the validity of a credit contract or expire, the party need not
establish records liquidation credit agreement. Where customers require,
loan officers drafted record contract liquidation chief credit checking
process, considering the director before signing on liquidation.
Mortgage loan collateral:
-
Depending on specific conditions, Agribank where mortgage lenders
-
could wholly or partly secured assets.
At the request of customers, credit officers conducted comparing the
quantity and value of the assets securing loans with current loan
balance of customer, establish client requirements for deregistration
request for secured transactions (if any), the record suggested partial
or complete mortgage assets the chief consideration, write comments
-
prior approval of the director.
Pursuant to the approval of the director of the mortgage collateral,
loan officers and coordination with relevant staff and are assigned to
check the status of property assets and related documents, establish
procedures warehousing, delivery records up papers and property to
-
clients.
Having mortgaged property, the transaction must perform balance
sheet account and enter information mortgaged properties securing
loans in IPCAS system under current regulations.
3.2.
Lending situation:
16
Table 2: Status of lending activities
Unit: Millions
Differences
Target
2012
1. Analysis by period
2013
Absolutely
Relatively
(%)
232,586
248,015
15,429
6.63
207,248
228,176
20,928
10.10
25,388
19,839
(5,549)
(21.86)
2. Analysis by currency
232,586
248,015
15,429
6.63
Domestic
204,158
248,015
43,857
21.48
Foreign
28,428
0
(28,428)
(100.00)
USD
23,985
0
(23,985)
(100.00)
EURO
4,443
0
(4,443)
(100.00)
3. Analysis by borrowers
232,586
248,015
15,429
6.63
Enterprises
120,537
128,373
7,836
6.50
Household business
88,548
104,707
16,159
18.25
Others
23,501
14,935
(8,566)
(36.45)
Short-term loans
Medium and long term
loans
Looking at the figures, we see that outstanding loans continued to increase
steadily over the years. Specifically:
2012: Total loans reached 232 586 million. Among them:
Short-term loans: USD 207 248 million, accounting for 89.1% of total loans.
Medium and long-term debt balance: 25 338 million USD, accounting for
10.9% / total loans.
17
2012: Total loans reached USD 248 015 million increased 15 429 million (up
6.6%), compared with that 2012.Trong:
Short-term loans: 228 176 million, an increase of 20 928 (10.1%) accounted
for 92% loans
Outstanding loans medium and long term: 19 839 million, down 5,499
million (down 21.86%), accounting for 8% of total loans
Short term loans are often a large proportion of the total loans of objects
Branch because the branch's loan is often the SME, small business lending
and loan demand life so often in the short term. On the other hand it helps
the branch maintains a stable balance, ensure the safety conditions of the
capital.
Looking at the above figures we can see through the credit balance in local
currency for the high proportion. The credit balance for each year in local
currency increased by 43,857 million in 2013 compared to 2011; reverse
lending in foreign currency tends to reduce in particular the change in the
proportion of foreign currency loans that decrease. To 2012, the outstanding
balance was 28,428 million plummeted. Cause of foreign currency debt is
due to a decrease in recent years the economy has large fluctuations,
especially the debt crisis in Europe it has little to no impact on the
currencies of the countries of the EU blocks affect the inflation index,
consumer price index, in addition to strong fluctuations of the gold market
volatility has led to the rise and fall of the dollar led to the decline in
demand enterprise demand for foreign currency loans. Moreover, due to
specific lines of business, the marketplace is always fierce competition, the
demand for capital is extremely urgent, if the foreign currency used
sometimes makes it difficult for enterprises to be converted, badly affect
business performance.
Regarding lending customers:
2012
18
SME: 120 537 million, accounting for 51.8% / total loans.
Households and individuals: 112 049 million, accounting for 48.2% of total
loans. Among them:
2013
SME: 128 373 million, an increase of 7,836 million (up 6.5%), accounting
for 52.2% / Total loans.
Households and individuals: 104 707 million, an increase of 16 159 million
(up 18.25%), accounting for 47.85% loans
Taking into balance on the Bank provides capital fully, reasonably, for the
protection business loans, especially the SME in the city and is looking
forward to expand the branch to the neighboring commune with a motto to
help people make economic contribution to the local economy. Since then, as
a basis for business households and especially SME production business
under Vietnamese law diversify lending practices, types of loans, so that the
use of capital expenses Ba Dinh branch Bank for more growth. In addition,
the Branch should organize an uncompromising viewpoints of the Bank for
the Provincial Director "There is growth capital gain stable new balance" to
create stable development branch also as the Agricultural Bank system.
3.3.
Appraise:
3.3.1. Advantages:
The successful construction lending process Agibank helped a lot in
providing credit, business is considered the most important banks in Vietnam
today.
First, the system is launched internal credit rating. The Company's auditors,
Ernst & Young professional advice and World Bank funding, Agribank has
successfully designed software credits IPCAS (Intra Payment and Customer
Accouting
System),
connects
all
branches
and
transaction
offices
nationwide. Agribank Ba Dinh has effectively applied this software to
practice
19
Second, the process of Agribank loan enhance quality and safety in the work
of the lending branch. The uniform forms and procedures for appraisal of
credit officers help facilitate the analysis and credit decision. Furthermore,
each implementation phase separation and clear, expressed through the
appraisal report and valuation minutes instead pooled separately as before.
3.3.2. Restrictions
According to the appraisal process, after lending reviewing the documents,
loan officers go to practice, to take place by the borrower to gather, learn.
This difficult customers in distant branch officials credit because not enough
time and reliable source of information to analyze. At the same time, the
cost of the appraisal is also quite large.
By the way, the valuation of collateral is also difficult. There are many
sources of law governing complicate the determination of the legal basis of
collateral. Moreover, the State bracket launched sometimes skewed than the
market price. At Agribank Ba Dinh District, the property valuation for the
loan officer in charge without separate department for pricing. This lack of
consistency to the pricing.
Finally, the use of collateral in the event the customer is unable to pay the
loan very difficult. Especially the case of collateral is real estate. Bank will
take a long time to be able to liquidate the collateral. In many cases, banks
also have to fix, investors can sell more.
4. A number of measures to improve
4.1.
Banking Solutions:
Strengthening fieldwork at the factory or business premises. This has not
been done thoroughly, especially with clients in remote branch
Improving the quality of information sources by appreciating the importance
of credit information, to redress the lack of information leads to wrong
judgment about the client.
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