Improvement needed: A cyclo-driver rides past a lamp shop in Hanoi. Experts say the existing legal framework on consumer credit is inadequate and lacks transparency. — AFP
HANOI: It is critical to develop a proper legal framework for consumer credit to protect the legitimate rights of both borrowers and lenders.
Ngo Xuan Duy from Vietnam International Debt Trading Company said that the existing legal framework was inadequate and lacked transparency, causing difficulties for the operation of companies in this field.
The mechanism for lending and debt collection related to consumer credit was not complete, which was negatively affecting the market, he said.
“We are still confused about how to make a debt reminder phone call in the right way,” he said.
In addition, many customers used fake documents to borrow money. It was necessary to enhance the responsibility of borrowers to make the market more transparent and prevent fraudulent activities, he added.
Both lenders and borrowers played a role in promoting the development of the consumer credit market, he stressed.
Nguyen Hoang Minh, chief representative of the Vietnam Banks Association in Ho Chi Minh City, said that being equated with usury made it difficult for finance companies to operate.
The lending and debt collection results of some finance companies slumped in the first quarter of this year, Minh said, adding that there was an increasing number of employees at finance companies quitting their jobs recently due to occupational risks and social prejudices.
Borrowers must be aware of their obligations while companies must improve their debt collection culture, Minh said.
Never have consumer loans been in difficulty as recently. The demand of borrowers was great, but finance companies did not dare to increase lending because of worries about the difficulty of debt collection.
Le Quoc Ninh, head of the Consumer Credit Club under the Vietnam Banks Association, said that consumer finance companies were in a lot of difficulty after negative information about companies which were not licensed by the central bank.
These companies were licensed by the provincial or municipal departments of planning and investment and operated under the Civil Law and the Law on Enterprise, not subject to the management of the State Bank.
Objectionable debt collection of some consumer lending companies and pawn shops which led to inspection and investigation by the policy negatively affected the image of mainstream consumer finance companies, he said.
Do Minh Hai, general-director of ATM Online, a fintech operating in consumer lending, said that consumer lending was more and more difficult in the context of economic slowdown, difficult business and production affecting the incomes of workers – the target customers of finance companies.
A representative from FE Credit said that the shortage of regulations on borrowers resulted in increasing payment delinquency. — Viet Nam News/ANN
