Phát triển dịch vụ tài chính vi mô của ngân hàng nông nghiệp và phát triển nông thôn việt nam tt tiếng anh

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 5
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 3 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 5 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); 3 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 6 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 4 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 3 months to 1
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 2 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 3 and 1290 transaction offices, 7 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 5 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

1. Branch number

Targets

UNIT
Branch

2. Number of transaction offices

Transaction

3. Property size

Billions dong

4. Owner's equity

Billions dong

5. 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


6. Mobilize capital

Billions dong

7. Total outstanding loans to the economy

Billions dong

8. Net income from service activities

Billions dong

1.796

1.977

9. 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 3
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 do 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 1 customer is VND 30 million / loan
- Loan term: According to survey results, the loan term of Agribank is less than 1 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 2 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
1. Number of customers
2. Number of micro credit services
3. 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 / 1 tv)
%
(million dong)
Group
Group
Group
Group
(million people)
(million VND / 1 tv)

(million VND / 1 team)
branch
%

2013Y
2014Y
2015Y
2016Y
2017Y
1,5
0,9
0,8
1,1
1,45
7
7
7
8
9
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 5 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 5 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 0 , 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 5 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 / 1 customer (in 2013)

increased to 24.3 million (2017) corresponding to 152%
The bad debt ratio of Agribank decreased over 5 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 5 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 4 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
1. The increase in the number of micro
savings services
2. Total deposit of micro savings
service
- Mandatory savings
- Voluntary savings
3. Number of customers using micro

Unit
Service

Million dong
Million dong
Million dong
Million people

2013Y

2014Y

2015Y

2016Y

2017Y

2

2

2

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
4. Average deposit amount

Million people
Million people
Million VND /
1 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 2 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

1. Number of customers using micro insurance
services
2. Number of micro insurance service services
3. Number of general agents providing micro
insurance services
4. Point of sale
5. 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

2

2

1

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 do 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 5 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 do 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 5 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 5 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 5 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

1

Utility products have a positive impact on customer satisfaction

Accept

2

Interest rate policy has a positive impact on customer satisfaction

Accept

3

Customer care policy has a positive impact on customer satisfaction

Accept

4

The level of reliability has a positive impact on customer satisfaction

Accept

5

Empathy has a positive impact on customer satisfaction

Rejected

6

Service capacity has a positive impact on customer satisfaction

Accept

7

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

1

The bank brand has the same influence on the Customer's decision to send micro savings

Accept

2

The interest rate policy has the same impact on customers' decision to send micro savings

Rejected

3

The distribution channel has the same impact on the customers' decision to send micro savings

Accept

4

Quality of service has the same impact on the customers' decision to send micro savings

Accept

5

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 do 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 4 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 5 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 5 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 6 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!