The State Bank of Vietnam (SBV) Binh Duong Branch has just issued an inspection conclusion for Saigon Thuong Tin Commercial Joint Stock Bank (Sacombank) Binh Duong Branch and Ben Cat Branch. Accordingly, the inspection process will take place from January 8, 2025 to February 21, 2025 according to inspection decisions No. 325/QD-BDU3 and 322/QD-BDU3 of the State Bank of Vietnam, Binh Duong Branch.
The inspection results showed that the two branches had complied with regulations on interest rates, exchange rates, debt classification, credit risk provisioning and use. At the same time, the prevention and combat of money laundering, anti-terrorism financing and insurance agency activities are also carried out according to regulations.
However, during the inspection, the SBV discovered many shortcomings and limitations in credit granting activities, especially related to customer appraisal, cash flow control after disbursement and credit risk management.
shortcomings in credit granting activities
According to the inspection conclusion, both branches have limitations in credit appraisal, disbursement and management, with the potential risk of bad debt arising.
At Sacombank Binh Duong: Some loan applications have not collected sufficient documents proving income.
The disbursement was made into the customer's payment account but there was no strict control of cash flow after the loan.
Some loans do not have documents proving the purpose of capital use, especially for large-value loans.
At Sacombank Ben Cat: Customers use loans for the wrong purpose but the bank has not strictly controlled them.
Some documents proving that the purpose of the loan is a high-value retail bill, which is not in accordance with regulations.
The assessment of debt repayment costs is not complete and the overall financial obligations of customers at other credit institutions have not been assessed.
Signing a mortgage contract appendix with the content of ensuring a maximum of 100% of the asset value, higher than the approval rate.
shortcomings in credit risk control
The inspection conclusion shows that both branches have not fully assessed the financial situation of customers when granting credit. Some customers have poor financial situation but are still approved to borrow capital.
The SBV also warned of credit risks for loans with cash revenue, when cash flow control is not strict. At Sacombank Ben Cat, some loans have poor financial situation in the years immediately prior to the credit granting period but are still being approved.
Comply with regulations on preventing and combating money laundering and foreign exchange activities
The State Bank Inspectorate noted that Sacombank Binh Duong and Ben Cat have issued internal procedures and regulations on money laundering prevention and control, in accordance with the provisions of the Law on Money Laundering Prevention and Control 2022 and Circular 09/2023/TT-NHNN.
However, at Sacombank Binh Duong, inspectors discovered that some money transfer transactions had not been fully checked customer information before implementation, although the AML Express control system had scanning the data.
Regarding foreign exchange activities, the SBV has not detected any violations related to foreign exchange rates or foreign money transfer transactions.
Reasons for limitations and errors
According to the inspection conclusion, the objective reasons affecting credit activities at Sacombank Binh Duong and Ben Cat mainly come from the fluctuating economic situation, affecting customers' financial capacity, reducing the ability to repay debts on time. In addition, some customers in the fields of agriculture and livestock still maintain the habit of cash transactions, without documents proving revenue, causing difficulties for banks in the process of appraising loan options.
In addition, subjective reasons originating from the bank's own internal internal activities were also pointed out, including ineffective appraisal and control of cash flow after disbursement. The inspection and supervision of loan records have not ensured adequate documents according to regulations, leading to problems that need to be overcome.
Determining the responsibility, the SBV requires both relevant collectives and individuals to be responsible for these errors. Leaders of branches, transaction offices and professional departments are jointly responsible for the detected limitations. At the same time, individuals directly involved in appraisal, control of records, disbursement, re-evaluation and approval must also be responsible according to their scope of work.
To overcome this, the SBV requires Sacombank Binh Duong and Ben Cat to immediately implement specific measures such as reviewing and supplementing complete loan documents; strictly controlling cash flow after disbursement to ensure that loans are used for the right purposes; re-evaluating high-risk loans, adjusting credit policies appropriately. At the same time, banks also need to learn from experience in signing a mortgage contract appendix to ensure compliance with approved regulations and strengthen the comparison of customer documents, limit credit risks.
In addition, the SBV recommends that Sacombank Ben Cat rebuild credit risk control measures, especially for customers with unstable financial history to ensure system safety.
