The strong recovery of the macro economy has opened up opportunities for many Vietnamese businesses as well as individual investors, which has unexpectedly created a favorable environment for the rise of black credit, which is loan at extremely high rates. The consequences of this make society less stable and can badly affect banks’ monetary activities.
According to previous regulations, borrowers must have collateral to secure bank loans, which has become an invisible barrier that blocks many farmers from gaining access to State credit. Reluctantly, they have to come to loan sharks unaware of all risks. With exorbitant interest rates, there have been many cases of losing homes and all properties.
Predatory lending results in crime
At the Conference of 2019 in the banking industry, Prime Minister Nguyen Xuan Phuc said: “Predatory lending with exorbitant interest rates is besieging vulnerable people anywhere. Moreover, the debt collection in gangsters’ way today has forced borrowers to lose homes and pushed borrowers' families into poverty.” The Prime Minister requested the banking sector and Vietnam Bank for Social Policies (VBSP) study and propose solutions, such as raising the loan level for poor households, so that people are not threatened by loan sharks.
In the past four years, there have been nearly 8,000 cases related to black credit, of which 56 cases led to murder, 398 cases of intentional injuries, 629 robbery cases, 1,890 fraud cases, said the Ministry of Public Security. According to Mr. Pham Van Toan, Deputy Director of the Criminal Police Department, black credit has resulted in a lot of crimes involving debt collection companies, in which most are mobsters and gangsters.
Repelling loan sharks is considered a key task not only for the banking sector, but also for the police and the whole society. In particular, in the short term, the banking system should provide preferential policies for people to borrow capital, especially those in difficult circumstances.
Raising lending levels and loan term for poor households
In response to this situation, Mr. Le Minh Hung, Governor of the State Bank cum VBSP Chairman, signed a decision to increase the maximum lending level and loan term for poor households in order to meet the demand of service capital for production and business. Accordingly, starting from March 1, VBSP will increase the maximum lending level for poor households from VND50 million/household to VND100 million/household without the need to have loan guarantee.
At the same time, it will also increase the maximum loan term to 120 months, in accordance with the growth and development process of long-term investors.
Deputy Governor Dao Minh Tu of the State Bank said, now, people are consuming about VND2,500 billion from loan sharks, accordingly, the State Bank is expected to deploy a credit package of VND5 trillion assigned to the Vietnam Bank for Agriculture and Rural Development (Agribank) to implement.
In this orientation, VBSP and Agribank are the two main focal points to build specific capital sources, policies and advantages covering the network of wards and communes in order to boost loans for supporting households.
Sharing about the efforts of VBSP in bringing capital to the poor and policy beneficiaries in the past 16 years, Ms. Tran Lan Phuong, Deputy General Director of VBSP, said the credit capital of social policies had helped nearly five million households to overcome poverty, and attracted and created nearly 3.7 million jobs. Nearly 119,000 employees of policy families have been allowed to borrow money to work abroad, more than 3.6 million disadvantaged students have received loans to study. More than 11 million rural clean water and sanitation projects have been built from this capital, along with nearly 105,000 houses for victims of Mekong Delta floods, nearly 571,000 houses for poor people, and over 13,000 houses to resist storms and floods in the Central region, have contributed to a multi-dimensional and deep impact on people's lives throughout the country.
Currently, the State Bank is also studying the mechanism for the system of commercial banks and financial companies to participate in this plan to expand coverage and reach more people with low average income.
Mr. Phan Dinh Tue, Deputy CEO of Saigon Thuong Tin Commercial Joint Stock Bank (Sacombank), said that the bank had implemented many installment loan products and services to limit predatory lending. Sacombank has a policy of lending through credit cards. The card limit is about VND10 million for middle-income earners, and coordinating with market management to provide small businesses with credit loans to pay for capital contribution and daily interest. According to Mr. Phan Dinh Tue, commercial banks need to expand their network to remote areas, offer many simple financial products, the lending amount of several million VND for people to easily access capital. On the other hand, business owners, organizations and political groups need to support banks more in debt recovery.
"When lending to workers in export processing zones and industrial parks, the banks always want the owner to ensure the debt recovery taken from the borrower's payroll account. From that, the banks will put in more effort to repel loan sharks from creeping into workers’ lives,” said Mr. Phan Dinh Tue.
Thus, with the determination to repel loan sharks, the system of Vietnamese credit institutions has taken another step to realize this determination.
Binh Minh
Vietnamese
