Vietnamese Tiếng Việt | Monday, March 25, 2019 | Advertise with Us
   
Text Size

Vietnam fights against loan sharks and shadow banking

Share
(0 votes, average 0 out of 5)

Officials vowed to fight against loan sharks who are wrecking thousands of lives across Vietnam.

Vietnam fights against loan sharks and shadow banking, vietnam economy, business news, vn news, vietnamnet bridge, english news, Vietnam news, news Vietnam, vietnamnet news, vn news, Vietnam net news, Vietnam latest news, Vietnam breaking news

Loan sharks make it easy to take out unsecured debt

 

Last week, the State Bank of Vietnam (SBV) held a seminar in Gia Lai province to discuss new ways to combat loan sharks who charge exorbitant interest rates and harass borrowers if they fail to make a timely payment. Loan sharks are indeed a national problem, as these groups have networks that reach from rural or remote provinces to the busiest urban areas.

“The tactics used by loan sharks are becoming incredibly complex, and their criminal activities continue to threaten social order and people’s lives,” said Tran Van Tan, deputy head of the Credit Department at the SBV. Official statistics show that in the past four years, Vietnam recorded 7,624 criminal cases related to unlicensed moneylenders, including 56 murders.

Most loan sharks charge unimaginable interest fees between 180 and 360 per cent a year, making it very difficult for borrowers to pay back in full. The common targets of these illegal lenders are cash-strapped farmers, students, street vendors, gamblers or even entrepreneurs. Desperate for money, these victims have fallen prey to illegal moneylenders who usually do not require any form of collateral or personal credit checks.

Advertisements for uncollaterised loans can be easily found in any corner of big cities, from wet markets to schools. Thanks to technology, loan sharks have also emerged on social media, texting platforms, and websites, usually disguised as financial advisors or consumer finance companies.

Pawn shops or gold stores are also common fronts for illegal moneylending. Just last week, police officers in Thanh Hoa province busted a loan shark group named Tin Nghia Financial Corporation, which pretended to be a transportation and ticket booking business. Contracts between Tin Nghia and borrowers were labelled as “motorbike leasing agreements” to avoid suspicion.

SBV officials pointed out that if the borrowers default on their loans, they will be subject to various forms of coercion, assault, and violence carried out by the loan sharks. Debt collectors will also harass the victims’ family members, friends, employers, and co-workers to demand money back.

“Loan sharks often quote daily interest rates, making the rates look smaller than they really are,” said Tran Van Tan. Scores of victims had to sell their house or their business and leave their hometown to avoid the aggressive lenders, most of whom come from criminal groups.

Pham Van Thanh, lawyer from the Ho Chi Minh City Bar Association, said that some borrowers have been evicted from their own house by loan sharks. The lawyer believed that it is very important to warn borrowers of these risks, as well as give them legal options to borrow money.

Financial institutions are stepping in to help solve this problem. One solution is fostering the growth of consumer finance firms, who can offer unsecured loans that comply with the SBV’s rules. The banks themselves are also doing what they can – Agribank, for example, launched a loan package of VND5 trillion ($217 million) last week to assist poor customers in emergencies.

“If we give people legitimate ways to take out loans, then illegal loan sharks will starve and die,” said lawyer Pham Van Thanh.

This Friday (March 15), VIR will organise the third seminar on consumer finance in Hanoi. The theme of this year’s installment is “Developing consumer finance as a solution to ward off shadow banking."

Leading experts in the financial sector, together with senior executives from consumer finance firms, will join the seminar to answer questions related to this fast-growing industry.

Potential topics include the current market size of Vietnam’s consumer finance segment, how personal consumption needs can be financed with legal lenders, and regulatory updates to ensure a transparent environment for both borrowers and lenders. The seminar will be live-streamed on VIR’s websites and social media channels.

 

 

Source: VIR

Maybe You Also Interesting :

» Thanh Hóa police crack down on loan sharks

Five people were arrested in the central city of Thanh Hóa on Wednesday for drug possession and offering loans at extremely high interest rates.

» Loan sharks traps poor people

The recent rise in ‘black credit’ has trapped individuals and families in big cities of Hà Nội and HCM City as well as other provinces. When approaching...

» Specialist police unit set up to target loan sharks

Police in southern Bình Thuận Province have set up a special police unit to crack down on illegal loan sharks, which have reportedly been increasing their...

Login