STATE BANK OF VIETNAM BANKING ACADEMY Faculty of Foreign Languages GRADUATION THESIS CURRENT BACKGROUND AND SUGGESTED SOLUTIONS TO ENHANCE NON-CASH PAYMENTS A CASE OF AGRIBANK- CHUONG MY BRANCH Supervisor : Le Thi Minh Que (M.A) Student : Nguyen Thi Khanh Huyen Class : ATC.A- K12 Student ID : 12A7511080 Hanoi, May 2013 i DECLARATION I declare that this thesis is my own work and has not been submitted in any form for another degree or diploma at any university. Information derived from published or unpublished work of others has been acknowledged in the text and a list of references is given. Signature Ha Noi, May 2013 Nguyen Thi Khanh Huyen ATCA - K12 ii ABSTRACT Nowadays, non-cash payments contribute a significant role in economy development not only in Vietnam but also all over the world. This study gives an insight into non- cash payments in Agribank- Chuong My branch by analyzing its annual reports and statistics.
The results show that the payment order, among the different non-cash payment forms, appears to be more popular to the customers mainly because of simple procedures and time saving. The study also provides some solutions related to human resources, customer care, technology to enhance non- cash payments in Agribank- Chuong My branch. Key words: solutions, non-cash payments, Agribank- Chuong My branch. Nguyen Thi Khanh Huyen ATCA - K12 iii ACKNOWLEDGEMENTS This thesis would not have been possible without the guidance, support and encouragement of many people.
In particular, I ought to thank two individuals stand out as they contributed significantly to the completion of this thesis. First and foremost, I would like to thank Ms. Le Thi Minh Que for her valuable guidance and support for my thesis. She is always willing to listen, encourages discussion and displays a lot of patience when helping me conducting this study.
Le Thi Minh Que is a wonderful mentor with professional knowledge and great sympathy. The quest for my graduation thesis has certainly taught me many things and I believe it has also instilled many positive changes. Hereby I want to give my special thanks to Ms. Le Thi Minh Que.
Secondly, I would like to thank Ms. Dang Thi Que, my wonderful mother who assisted me with the data analysis and its interpretation. Dang Thi Que is an excellent mentor for me, as I was trying to address the research questions through the data gathered via internet or bank sources. Her clarify on data analysis and the suggestions she made ultimately resulted in improving my thesis, and for this I am grateful to Ms.
Dang Thi Que. Last, but not least, I would like to thank the staff of Agribank- Chuong My branch who supported me enthusiastically during my internship and provided me with valuable information about non- cash payments. Nguyen Thi Khanh Huyen ATCA - K12 iv TABLE OF CONTENTS DECLARATION. iii TABLE OF CONTENTS .iv LIST OF ABBREVIATIONS.
vii LIST OF GRAPHS AND TABLES. Scope and Subject of the Study. OVERVIEW OF NON- CASH PAYMENTS IN VIETNAM AND IN THE WORLD. Overview of Non- Cash Payments.
Definitions and Characteristics of Non- Cash Payments. Roles of Non- Cash Payments in the Market Economy. Main Forms of Non- Cash Payments. Standing Order/ Payment Order .9 Nguyen Thi Khanh Huyen ATCA - K12 v 2.
Letter of Credit/ Documentary Credit. Background of Non- Cash Payments in Vietnam and in the World. Background of Non- Cash Payments in the World. Background of Non- Cash Payments in Vietnam.
CURRENT BACKGROUND OF NON- CASH PAYMENTS IN AGRIBANK – CHUONG MY BRANCH. History and Development of Agribank- Chuong My Branch. Foundations and Developments of Agribank- Chuong My Branch. Organizational Structure of Agribank- Chuong My Branch.
Current Background of Non- Cash Payments in Agribank-Chuong My Branch. Contribution of Payment Activities to Total Service Income in Chuong My Branch. Sales of Non- Cash Payments in Chuong My Branch (2010-2012). Sales of Payments by Payment Order .2 Sales of Payments by Bank Cards.
Sales of Payments by L/C .4 Sales of Payments by Cheque and Collection Order. Achievements and Limitations of Non- Cash Payments in Chuong My Branch. Limitations and Causes .31 Nguyen Thi Khanh Huyen ATCA - K12 vi CHAPTER IV. SUGGESTED SOLUTIONS TO ENHANCE NON- CASH PAYMENTS IN AGRIBANK- CHUONG MY BRANCH.
Perfecting the System of Non-Cash Payments. Improving Effectiveness in Marketing and Advertisement of Products. Improving the Quality of Customer Care. Accelerating Modernization of Banking Technologies, Renovation of Payment Techniques and Technologies.
Suggested Solutions to Main Payment Forms. Payment by Payment Order. Payments by Bank Cards. Payment by Cheque.
Payment by Collection Order. Limitations and Suggestions for Further Study. 41 LIST OF REFERENCES Nguyen Thi Khanh Huyen ATCA - K12 vii LIST OF ABBREVIATIONS Agribank Vietnam Bank for Agriculture and Rural Development SBV State Bank of Vietnam B/E Bill of Exchange L/C Letter of Credit DC Documentary Credit ATMs Automatic Teller Machineries POS Points of Sale IT Information Technology GDP Gross Domestic Product E- payment Electronic Payment IPCAS Intra Payment and Customer Accounting System SMEs Small and Medium Enterprises SMS- Short Message Service- Banking banking Nguyen Thi Khanh Huyen ATCA - K12 viii LIST OF GRAPHS AND TABLES Page Figure 1: Cheque operation process……………………………………………… 7 Figure 2: Standing order operation process……………………………………… 8 Figure 3: Collection order operation process…………………………………… 10 Figure 4: L/C operation process…………………………………………………. 11 Figure 5: Bank card operation process…………………………………………….
13 Figure 6: Organizational structure of Agribank- Chuong My branch…………… 20 Figure 7: Contribution of payment activities to total service income of Chuong My branch…………………………………………………………. 22 Table 1: Sales of non- cash payments in Chuong My branch (2010-2012)……….23 Table 2: Sales of payments by Payment order in Chuong My branch (2010-2012)……….24 Figure 8: Sales of payments by Bank cards in Chuong My branch (2010-2012).……… 25 Figure 9: Number of customers using Mobile banking services in Chuong My Branch (2010-2012)……………………………………………. 26 Figure 10: Sales of payments by L/C in Chuong My branch (2010-2012)………. 27 Figure 11: Sales of payments by Cheque in Chuong My branch (2010-2012)…………28 Figure 12: Sales of payments by Collection order in Chuong My branch (2010-2012)…….
29 Nguyen Thi Khanh Huyen ATCA - K12 1 CHAPTER I INTRODUCTION 1. Rationale “An economy cannot grow if its banking system is not developed. Commercial banks’ growth is a necessary condition for an economy to stably develop”, Nguyen Van Binh- the governor of State Bank of Vietnam stated in a meeting with representatives of commercial banks in June, 2012. After nearly two decades of renovation, Vietnam's economy has achieved critical success; the structure of economy has been shifted towards industrialization and modernization.
Along with these improvements, commercial banks have increasingly affirmed its important role in promoting economy’s development. In addition, the role of commercial banks to economy can be seen through its payment intermediary function, especially the operation of non- cash payments. Facts have shown that non-cash payment method increasingly dominates the market thanks to its superior benefits, and makes great contributions to economy development. In comparison with cash payment method, non- cash payment method brings many advantages for banks, customers and Government.
The development of non- cash payments via banks not only creates the foundation for improving activities of banking business, but also helps the State manage a macro effectively, especially in the process of international economic integration. Furthermore, the providers of non-cash payment services are mainly commercial banks, so banks play an increasingly important role in economy. Nguyen Duc Thanh, Center for Economic Research and Policy, Hanoi National University, mentioned in a talk with students of Hanoi National University in December, 2012: “Today, banking industry is considered as the backbone, the lifeblood of economy, contributing to the country's economic growth”. Thus, the banking sector has put more weight on enhancing institutional mechanisms as well as business activities, including the operating of non- cash payments.
Nguyen Thi Khanh Huyen ATCA - K12 2 In recent years, Vietnam Commercial Banks in general and Agribank system in particular has made great progress in payment technology to attract more customers and rapidly integrate into the region and the world. Non-cash payments via banks actually go into social life, bring significant achievements. However, compared with the developing requirements of economy in the renovation period, non-cash payment services in Vietnam commercial banks are quite inadequate in many respects, especially in modernizing payment technology, popularizing non-cash payment in the residential areas. On basis of the real situation of non- cash payment in Vietnam, there are some proposals to the banking industry in general and Agribank system in particular as well as economists to find effective solutions, completing this service and creating background for the banking industry to integrate into the international payment network.
Research Purposes The main purposes of the present study are (1) to point out the theoretical issues of non- cash payments operations, in particular the performance of non- cash payment services development in Agribank-Chuong My branch; (2) to analyze the business operations of non- cash payments; (3) to provide suggested solutions to enhance those non- cash payment services in this branch. Scope and Subject of the Study Subject of the study: theoretical issues and practice related to developing non- cash payment services in Agribank- Chuong My branch. Scope of the study: mainly focusing on research on development of non- cash payment services in Agribank- Chuong My branch. Research Methods After collecting data from Annual Report of Agribank- Chuong My branch (2010- 2012), the thesis has just applied some research methods such as: Synthesis, Comprehensive Analysis.
Moreover, the thesis uses reliable secondary data sources like Nguyen Thi Khanh Huyen ATCA - K12 3 reports, researches which are done by trustworthy articles, websites to figure out the conclusions on this research topic. Research Questions To achieve the above purposes, three research questions are addressed in the present paper as follows: Questions 1: What are the main forms of Non- cash Payments? Question 2: What is current background of Non-cash Payments in Chuong My branch? Question 3: What are possible solutions to improve Non- cash Payments in Chuong My branch? 6. Research Structure In addition to the acknowledgements, lists of abbreviations, tables, figures, references, the main contents of the thesis include five chapters. The Introduction chapter includes six parts: rationale, purposes, scope and subject of the study, methodology, research questions and research structure.
The following chapter mentions the overview of non- cash payments in Vietnam and in the world. Then, chapter three consists of the current background of non- cash payments in Agribank- Chuong My branch. Chapter four provides some suggested solutions to enhance non- cash payments of Chuong My branch. Finally, the conclusions are drawn in the last chapter.
Nguyen Thi Khanh Huyen ATCA - K12 4 CHAPTER II OVERVIEW OF NON- CASH PAYMENTS IN VIETNAM AND IN THE WORLD 2. Overview of Non- Cash Payments 2. Definitions and Characteristics of Non- Cash Payments Definitions of non- cash payments: According to thefreedictionary.com, non- cash payments are the methods of paying for goods and services that do not involve the exchange of cash. Moreover, under “Giao Trinh Ke Toan Ngan Hang” written by Dr.
Nguyen Thi Thanh Huong and Teacher of Merit Vu Thien Thap, page 208, non- cash payments are payments made without the use of cash by transferring certain amount from payer’s account to beneficiary’s account (in a bank or saving office) or by offsetting mutual claims. Characteristics of non- cash payments: The launch of non-cash payment method associates with the launch of the recording cash and the development of banking system. Therefore, non- cash payment method has some following basic characteristics: The most important and outstanding characteristic of non- cash payments is the movement of currency independent of the movement of goods in both time and space.