Illustrative image (Photo: VNA) Hanoi (VNS/VNA) - The State Bank ofVietnam (SBV) has warned local people and firms to consider carefully and becautious before taking part in peer-to-peer (P2P) lending as there are manypotential risks related to the service.
According to the SBV, the fourth industrial revolution has promoted thedevelopment of many new products and services, including P2P lending, which isdesigned and developed on the basis of digital technology to directly connectborrowers with lenders (investors) without going through financial intermediariessuch as credit institutions or foreign bank branches.
The development of P2P lending has created a new capital supplychannel in the global market and contributed to promoting financial inclusion,but it also has many potential risks that have been experienced all over theworld.
This form of lending is fertile ground for high-tech crimes and fraud, such astax evasion, money laundering, terrorist financing and theft of personalinformation.
In Vietnam, there have recently appeared several serviceproviders with similar models to P2P lending companies. But, operations of suchcompanies have some shortcomings. For example, they make false advertisementsabout profits, or provide inaccurate information related to risks whenparticipating in the service.
Some lenders also lendat very high interest rates, far exceeding the interest rate cap of 20 percentper year legally allowed by the country.
"If a dispute arises due to the failureto claim loans, lenders may lose money as it makes it difficult to claimresponsibility from P2P lending platform providers," the SBV warned.
According to the central bank, lending also may causesocio-economic instability due to borrower defaults, causing long-term andheavy consequences that many countries around the world have experienced. Chinahad to eliminate some 160 online lending companies as they were in facthigh-tech criminals working to cheat investors.
The SBV said that it was carefully studying international models ofP2P lending to develop a legal framework to effectively manage the country’snascent fintech sector.
"A legal framework can bring out the positive aspects of this service,while preventing and minimising the risks and ensuring safety for individualsand enterprises, thereby enhancing financial inclusion in Vietnam,"SBV Deputy Governor Nguyen Kim Anh said.-VNS/VNA
VNA
