Central bank promotes licensed consumer finance

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A member of staff introduces a customer to consumer loans of FE Credit Company. Photo vneconomy.vn

HÀ NỘI — The State Bank of Vietnam (SBV) will enhance inspections to discover illegal finance companies and protect the interests of consumers and licensed finance companies, according to SBV’s Governor Nguyễn Thị Hồng.

The decision was made in the Governor’s written response to questions from a National Assembly delegate on banking activities after the media reported some individuals and companies have recently set up and advertised unlicensed loan apps and websites that have affected the interests of consumers.

According to Hồng, the SBV has also received a request to co-operate in providing information to the Police for fraud and companies that violate the law.

The Governor said the SBV had directed its branches in provinces and cities to proactively report and propose to the municipal and provincial People’s Committees measures to prevent fraud, stopping individuals and companies from carrying out or advertising banking products and services without getting licences from the SBV.

According to the Governor, consumer loans play an important role in socio-economic development as they improve the quality of life for people through the provision of credit to promote consumption. The increase in consumer demand will help promote production and create more job opportunities, making a positive contribution to economic growth.

Sharing the same view, economist Vũ Đình Ánh said in the context of declining incomes due to the pandemic, consumer lending is an important factor to stimulate domestic aggregate demand through a rise in retail and consumption. There will be a large number of people who need this type of consumer finance to enable them to fulfil needs and stabilise their lives.

Consumer credit is often used to describe an unsecured or collateralised loan to support financial resources to meet consumers’ needs such as housing, transportation, living facilities, study, travel and healthcare before they can afford it.

Compared with usury from unreliable sources, consumer loans from credit institutions will be a better and safer choice for consumers. However, experts noted when having access to credit, consumers need a written consumer loan contract, the form and minimum contents of which are specified in the State Bank of Vietnam’s Circular 43/2016/TT-NHNN dated December 30, 2016, to protect their interests and avoid undesirable consequences.

Sixteen finance companies are licensed to provide consumer lending with total charter capital worth more than VNĐ22 trillion (US$948 million). Those with the largest charter capital include FE Credit (VNĐ7.328 trillion), SBIC Finance (VNĐ2.532 trillion), EVN FC (VNĐ2.5 trillion), Home Credit (VNĐ2.05 trillion) and HD Saison (VNĐ1.4 trillion).

A number of banks have launched finance companies, such as VP Bank with FE Credit, HDBank with HD Saison, SHB with SHB Finance and MBBank with Mcredit.

Banking expert Cấn Văn Lực said Việt Nam’s consumer credit market had significant potential for development. Consumer loans are estimated to account for around 18-20 per cent of the total outstanding loans in the economy. — VNS

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