The Banking Inspectorate and Supervision Department, State Bank of Vietnam, Binh Duong Branch, has announced the Inspection Conclusion on the inspection of Orient Commercial Joint Stock Bank, Binh Duong Branch (OCB Binh Duong).

The inspection focuses on credit granting to large customers (including lending, off-balance sheet commitments, bad debt handling, off-balance sheet debt recovery after risk handling) for large customers, customers with potential risks; Compliance with regulations on anti-money laundering, anti-terrorist financing; Foreign currency trading and money transfer activities abroad; Insurance agency activities.

OCB Binh Duong consists of 01 branch, 04 functional departments, and 04 affiliated transaction offices.

In 2023, indicators such as credit and profit both increased compared to 2022. However, according to the inspection conclusion, in the first month of 2024, OCB Binh Duong's credit balance and profit both decreased compared to previous years and the same period. In addition, credit quality also declined, and the bad debt ratio tended to increase gradually.

OCB PGD Di An.jpg
Di An Branch of OCB Binh Duong. (Photo: OCB).

According to the inspection conclusion, OCB Binh Duong still has shortcomings and limitations in its operations that need to be reviewed to overcome and correct, in order to limit risks that may occur during operations.

Regarding lending activities, OCB Binh Duong has not issued internal regulations on "Other legal entities and individuals with potential risks to operations"; The Branch's overdue debt transfer notice does not fully contain the required content; OCB's Core Banking T24 software system has not fully automatically tracked customers' debt repayment probation period.

The branch has not really paid attention and closely monitored the loan capital and customer operations; Credit granting to customers for large consumer loans of over 100 million VND, documents proving the purpose of capital use only include delivery receipts/invoices/lists of goods; The branch has assessed and approved customers for a 12-month grace period for principal repayment without any basis for proof;

The branch appraises and approves loans for capital needs to pay for real estate transfer costs/compensate for real estate transfer based only on the value on the loan papers/deposit contracts provided by the customer, not collecting and basing on the transfer value on the notarized transfer contract.

Regarding the specific shortcomings and violations in the lending activities of OCB Binh Duong, the inspector concluded: the loan records were not strict; the records and documents related to the loan were not consistent and did not record full information; the branch did not collect full loan records; the appraisal of capital needs was not appropriate or did not have sufficient basis; documents proving the source of debt repayment were not collected fully; the appraisal of the financial situation and source of debt repayment of customers was not strict.

The branch's debt repayment schedule is not suitable to the customer's income source, and the assessment of the customer's loan repayment source is not suitable.

Not fully implementing the inspection and supervision of loan capital and financial situation of customers according to internal regulations; not fully collecting documents proving capital use.

Branches/customers have not complied with the conditions of credit approval; lack of monitoring of payments for each input partner, each economic contract, each invoice, ensuring that financing does not exceed the invoice value and contract value;

Not tracking sponsored invoices for each economic contract and each beneficiary to avoid duplicate sponsorship.

Regarding foreign currency trading and money transfer activities abroad, OCB Binh Duong has made decisions that are not in accordance with regulations for individual customers.

Regarding the prevention of money laundering and terrorist financing, the Branch has not collected sufficient customer identification information as required when opening a payment account.

The Banking Inspectorate and Supervision Department of the State Bank of Vietnam, Binh Duong Branch, determined the collective and individual responsibilities for the errors that occurred at OCB Binh Duong, and at the same time recommended that the branch pay attention to the shortcomings and warn of risks to customers mentioned in the inspection conclusion.

At the same time, the Bank Inspectorate and Supervision requires measures to closely monitor the production and business situation, cash flow, analyze the financial situation, progress of project implementation/loan plan, business plan, debt repayment source, fluctuations in business assets, organizational situation, apparatus, management and administration of customers, changes in collateral, periodic revaluation of collateral, customer debt situation at other credit institutions (if any), take measures to strictly manage collateral, etc. to promptly apply appropriate credit handling measures according to OCB's regulations and the law.

"Require branches to have specific measures and plans to recover bad debts that have been handled with risk provisions, in order to limit losses for the bank," the Banking Inspectorate and Supervisor stated.