In losses for Vietcombank. Therefore, if one alternative

In credit activities, the maximum and minimum amount of money for lending mentioned in the credit policy of each bank is important. If the borrowing sum is too small, the bank gains little but still has to pay administration cost, processing cost and surveillance cost. In contrast, if the borrowing sum is too big, it is a big risk for the bank. However, the surveillance environment depends on many factors out of Vietcombank’s control. The interest rate limit and credit policies of the Central Bank have a great effect on Vietcombank’s credit management environment. When customers try to cheat Vietcombank, they can find ways to succeed, and that is a big risk Vietcombank is suffering and cannot control. Therefore, this solution has limitations. Secondly, there is solution alternative about improving credit products. C urrent credit products of Vietcombank are variable. Vietcombank has launched credit for consumption (high income customers), credit for individual investment (credit for stock securities and stock exchange), household credit (quick loan) and Business credit (for import and export and credit for foreign companies in industrial zone). Vietcombank can develop the quality of current credit products in old markets or enlarge operation market by widening the banking network. Vietcombank last year 2009 tried this solution, but the result did not seem to be much different. With customers who appreciate other banks do not care much about new products of Vietcombank or new location of new branches. But for customers who are faithful with Vietcombank, they will still come to Vietcombank branch even if it is rather far from where they stay and will go ahead with whatever product Vietcombank offers. To help increase credit product quality, Vietcombank should improve information technology. It takes long time for credit staff to check customers’ details as CIP code (Customer Information Profile) is not updated in the database or CIP is stored differently between debt department and investment department, etc. Most of nonperforming loans of Vietcombank are long term. After five years or ten years, the customer suddenly gets bankrupt, and all money during that period is worthless, whereas it may have been used for other effective investments. Hence, Vietcombank should lure and encourage short term borrowing. However, improving products but having careless bank staff still causes losses for Vietcombank. Therefore, if one alternative is to be chosen, this alternative does not much contribute to the mitigation of credit risk and takes long time to see effects. Thirdly, there is solution alternative about credit grant procedures. Businesses should be required to submit credit application at least one week in advance, and the application must include all necessary documents such as application form, business plan, balance sheet, financial reports, tax code, business registration code, etc. If the loan is long term, their project must enclose scientific and economic proof or illustrations. Based on the interview with Vietcombank managers, many big debts are borrowed by joint stock companies and limited liability companies, and mostly in Hanoi and Ho Chi Minh. Therefore, a solution is that Vietcombank should limit the value of loans for these businesses in these two biggest cities. If the loan is in foreign currencies, import license and import contract are required to show. There used to be cases when people borrow in foreign currencies, sell after borrowing to get VND, deposit in VND and buy back foreign currencies to return the bank when it comes to period of payment. Banks in Vietnam gives a high interest for deposits in VND and low interest for loans in foreign currencies. Hence, those borrowers get much profit without working. Therefore, there should be a requirement to present import contract to avoid this type of borrowing. The Central Bank also requires borrowers to have a certain legitimate reason.  If the application form is signed by company vice manager only, the loan contract should not be approved unless there is original valid authority from the general manager. All the documents the client shows must be original or truly certified because if the credit procedure is done carelessly and if dispute occurs, it will be very difficult for Vietcombank to sue if there are not enough legal documents, and clients can easily deny. Moreover, evaluation process must be based on different sources of credit information. The information submitted by customers must be rechecked, because usually customers reveal good information about them and tend to hide bad information about their finance or operations. It is necessary to discuss and get consultancy from credit rating agencies and auditors before giving credit to big corporations. This solution option is within the control of Vietcombank, so it is feasible. Forthly, there is solution alternative about training staff. Officers should be trained how to make plans, evaluate and analyze competitiveness, risk and manage human resources, development phase and pace. Results from the questionnaire show that credit staffs are very willing to help improve and purify the granting process. The survey shows that credit staffs are willing to study providing that the time for study is counted for the working time. They agree to ask for CIC information about customers before giving recommendation to the head director for approval. After giving credit to customers, credit staffs promise they will check the business as well as projects of customers carefully. Therefore, classes should be held to upgrade credit staffs’ knowledge and understanding. Classes may have 50 people including representatives of different branches in a province and be held twice a year. Banking expertise will be taught such as credit, guarantee, customer evaluation, accounting, auditing, import and export payment, and customers’ signature recognition. Credit understanding and ethnicity should be taught. Many staffs of Vietcombank were recruited before Doi Moi Renovation, and their knowledge is not updated. They even do not understand basic economics such as macro-economics, micro-economics, demand-supply rule, competition rule, etc. Especially they do not know much about the credit law not mentioning the updated one. Therefore, retraining staff is essential. There should be quarterly workshops about credit services. Credit staff should have a wide knowledge so that the evaluation step will not get into stuck, and there is less risk. If credit staffs do not understand how to analyze financial reports, they cannot know whether clients are making profit or loss. The Human resource department should recruit good students from economic universities, and train them from six months to one year. Every year there should be award for excellent staff that has many customers borrowing and paying in time and having no customers overdue paying or being warned of cheating signals. The survey also shows that as the bank staffs do not know much English, and when there are credit applications which use letters of credit for goods as collateral, they do not know how to solve. Therefore, another compulsory requirement is that all staff must have a certain good knowledge of English. There are many letters of credit attached with credit applications, and many documents about credit are written in English. Sometimes there are international workshops about credit which Vietcombank staff is invited to attend. Therefore staffs should be encouraged to study advanced English.