On April 20, at the seminar "Consumer credit: Lending and debt collection in accordance with the law" organized by Nguoi Lao Dong Newspaper, many opinions said that to promote the development of consumer finance, there needs to be transparency and clarity from both sides, the borrower and the lender. When lending, financial companies must have a loan contract, publicly and transparently disclose interest rates and debt collection methods, and handle secured assets if any...
Debt collection "hot"
At the seminar, economic expert - Dr. Nguyen Tri Hieu said that consumer credit accounts for a very large proportion of Vietnam's GDP, about 7% and accounts for about 20% of total outstanding credit. In Ho Chi Minh City alone, data from the State Bank of Vietnam (SBV) city branch shows that total outstanding consumer debt in the area currently reaches more than 933,000 billion VND, of which financial companies account for about 104,000 billion VND. If the population of Ho Chi Minh City is about 9.2 million people (statistics in 2021), on average, each person has access to about 102 million VND. In terms of social spending, this number is very practical.
"On average, consumer lending growth in the area reaches about 36% each year. By the end of 2022, the proportion of outstanding credit in the whole area will account for 22% and consumer credit demand will account for about 30%. This is a large and practical demand. If done correctly, it will positively spread to the economy," commented Mr. Nguyen Van Dung, Deputy Director of the State Bank of Vietnam, Ho Chi Minh City branch.
Consumer credit in Vietnam has developed rapidly recently, with young people increasingly seeking consumer loans. Consumer credit has become a market that commercial banks and financial companies are targeting.
However, Ms. Van Thai Bao Nhi, Senior Director in charge of debt settlement at Vietnam Export Import Commercial Joint Stock Bank (Eximbank), commented that in the post-COVID-19 period, when individual and corporate customers face difficulties, overdue debt and bad debt tend to increase. For some customers who are unable to repay their debts, banks are forced to take strong measures such as filing lawsuits in court.
"However, the Bank's viewpoint is to collect debt in accordance with the law, do it ourselves and not hire a third party to handle it. The Bank hopes to accompany customers in any difficulty" - Ms. Bao Nhi said.
In fact, in recent times, the consumer lending sector has seen many negative aspects, such as lending at "exorbitant" interest rates; "terrorist" and offensive debt collection; and groups of people "defaulting on debt". Recently, many localities are in the peak period of inspecting the activities of financial companies and illegal debt collection companies... This has caused public opinion to have an unfavorable view of consumer lending activities, affecting legitimate lending units.
Many experts, representatives of management agencies, businesses... participated in the discussion "Consumer credit: Lending and debt collection in accordance with the law" organized by Nguoi Lao Dong Newspaper. Photo: HOANG TRIEU
Need a clearer legal framework
Faced with this situation, Master - Lawyer Pham Van Duc, Duc & Pham LLC Law Firm, raised the question of whether financial companies and consumer lending companies have complied with the law? When the borrower provides legal documents, the company has assessed - whether to lend or not is the financial company's right. Once the loan has been granted, it is their responsibility not to be able to collect it. In case the borrower uses fake or fraudulent documents to borrow, it is a violation of the law.
"Recently, there has been a situation of lending too easily, making it difficult to collect debts. Financial institutions need to improve their expertise in assessing borrowers. The first condition is the borrower's collateral and cash flow to ensure debt repayment obligations," said lawyer Pham Van Duc.
According to experts, the underdeveloped consumer debt trading market has made this sector less sustainable. Mr. Ngo Xuan Duy, Legal Director of Vietnam International Debt Trading Company, said that businesses like his company are operating without a legal framework. Circular 43/2016 and Circular 18/2019 regulating consumer lending by the State Bank of Vietnam only directly regulate credit finance companies; debt trading companies do not have any.
"There needs to be a clearer legal framework that can be adjusted to debt trading companies instead of just credit institutions. We are quite confused about how to make debt reminder calls properly. The company also files lawsuits in court against customers who are slow to pay their debts, but the process is also difficult. The prosecution agency does not have a sympathetic view of this segment. Debt trading companies have to explain a lot even though they file lawsuits according to regulations" - Mr. Duy stated the current situation.
Lawyer Truong Thi Hoa, Ho Chi Minh City Bar Association, said that since 2019, there have been regulations allowing debt trading. Accordingly, enterprises are allowed to sell debt but debt buyers must operate legally. Now, the State Bank needs to supplement regulations to make consumer credit more transparent and clear. Specifically, enterprises wishing to operate must have a license and loan contracts must include a license issued by the State Bank. The self-introduction of companies also helps consumers access formal consumer finance effectively.
Mr. Nguyen Van Dung, Deputy Director of the State Bank of Vietnam, Ho Chi Minh City branch, said that the Department of Planning and Investment and the Department of Justice of the city need to review the legality, content of activities, and licensing of companies, law offices, and companies that conduct debt trading and collection to limit shortcomings in lending and debt collection.
Together for a better society
Speaking at the seminar, Dr. - journalist To Dinh Tuan, Editor-in-Chief of Nguoi Lao Dong Newspaper, said that in recent times, Nguoi Lao Dong Newspaper has always focused on information and propaganda about consumer credit. The newspaper also organized a seminar "How to solve black credit?" to create a community voice so that authorities, including the people, are clearly aware of the problem, thereby working together to build a healthy financial environment.
When there are fewer difficult circumstances pushed to the brink by black credit, society will become better. At that time, the fragrant flowers and sweet fruits and the beauty of humane life will spread more and more.
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