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Control and Evaluation: 7.4 Other Recommendations

The document discusses several recommendations for improving banking supervision and operations in Vietnam. It recommends that banks standardize procedures, improve risk management and internal controls, and be more prudent in managing deposits and loans to reduce risks. It also stresses the need for banks to enhance transparency of their performance data. Finally, it proposes additional recommendations that require coordination with other sectors, such as encouraging savings through banks, accelerating reforms of state-owned enterprises to reduce bad loans, and ensuring laws are enforced to protect lenders and borrowers.

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35 views1 page

Control and Evaluation: 7.4 Other Recommendations

The document discusses several recommendations for improving banking supervision and operations in Vietnam. It recommends that banks standardize procedures, improve risk management and internal controls, and be more prudent in managing deposits and loans to reduce risks. It also stresses the need for banks to enhance transparency of their performance data. Finally, it proposes additional recommendations that require coordination with other sectors, such as encouraging savings through banks, accelerating reforms of state-owned enterprises to reduce bad loans, and ensuring laws are enforced to protect lenders and borrowers.

Uploaded by

Đỗ Viết Hà TXA2HN
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as PDF, TXT or read online on Scribd
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Control and evaluation

The State Bank of Viet Nam should carry out an accurate assessment of the quality of banks’ balance
sheets to help effective banking supervision. In reality, not all banks’ balance sheets truly reflect the
quality of their performance.

Complete application of international accounting standard should be compulsory for all banks. IAS
audits would provide an independent assessment of banks’ performance. Recapitalization of banks
should be based on IAS calculation to reflect past and future costs of operations and further increase
banks’ accountability.

Banks should standardize procedures for management and operation. All banking procedures should
be integrated into automated systems to improve efficiency and reduce administration costs.

More attention should be given to internal control and risk management activities to ensure safety in
bank operations. Banks should be more prudent in participating in the “interest race” to compete for
deposits and clients. The application of a credit risk scoring system and bad debt control tools should
be implemented.

Banks need to improve transparency as well as reliability and timeliness of performance data,
particularly in balance of payments, NPLs and income statements. This information is essential in
building trust among clients and investors.

7.4 Other Recommendations

Besides recommendations on the above areas which directly relate to the banking sector in general
and banks in particular, the Consultant would also like to propose other recommendations. These
recommendations require the coordinated implementation of other industries and sectors outside the
banking system. Specifically:

The Government, relevant stakeholders, mass media agencies and banks should encourage a bank-
using culture and promote deposit savings and transactions through bank accounts, at the same time
limiting cash-using practices.

The Government and relevant ministries and agencies should work together to accelerate the
development of input factors and relevant industries such as stock markets, information technology,
accounting and auditing practices, and education and training in order to facilitate the development of
banking services.

The Government and relevant ministries and agencies such as the Ministry of Justice and Courts at
all levels should enhance law enforcement to effectively handle cases of bank fraud, insolvency of
borrowers and liquidation of mortgage assets. When the interests of both lenders and borrowers are
protected by law they will be encouraged to conduct more business.

The Government, ministries and localities should accelerate state-owned enterprise reforms to
support the banking sector in resolving and reducing NPL problems. Without rigorous measures in
reforming SOEs and loss-making industries and sectors, Vietnamese banks, particularly SOCBs still
continue to suffer NLPs and bad debts. The development of banking services depends largely on the
restructuring of SOEs, improving private sector investment and enhancing the governance and
transparency of policy making.

Development strategies, trade reform, and liberalization policy should be fed clearly into trade
negotiation. Trade negotiations should also be better informed of the competitiveness of different

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