Promoting consumer finance to fight black credit: experts

HCM City (VNA) - Promoting consumer finance and simplifying procedures for loan applications would be a priority for commercial banks, financial companies and microfinance institutions as part of efforts to limit black credit, a conference heard in Ho Chi Minh City on January 20.

Deputy Governor of the State Bank of Vietnam (SBV) Dao Minh Tu considered abolishing black credit as one of the important tasks that has been continuously implemented across the whole credit institution system in Vietnam.

In recent years, the SBV and credit institutions in localities have been cocoordinating with the Ministry of Public Security and local authorities in implementing drastic measures to limit black credit.

In the future, the SBV will continue improving the awareness of local people about credit policies, loan packages and procedures for loan applications so that local people could easily access bank loans.

Meanwhile, the State Bank will study and soon complete legal documents to deploy mobile money service in Vietnam while making loans from microfinance institutions easily accessible to local people, then gradually limit black credit.

With a network of branches and transaction offices that have spread all over the country, the SBV has instructed credit institutions to diversify banking products and services, reduce interest rates and simplify lending procedures in order to facilitate people’s access to credit packages through official channels, said Ha Thu Giang, Deputy Director of the SBV’s Department of Credit for Economic Sectors.

By the end of last year, the scale of Vietnam’s consumer finance market came to around 1.8 quadrillion VND (over 77.25 billion USD), accounting for over 20 percent of outstanding loans in the economy, up 7.4 percent compared to the end of 2019.

Pham Toan Vuong, Deputy General Director of the Vietnam Bank for Agriculture and Rural Development (Agribank), said his bank’s outstanding loans to individual customers have continued to grow over past years, adding that in 2020, individual customers accessed nearly 840 trillion VND worth of loans, a year-on-year increase of more than 7 percent.

According to Nguyen Thanh Phuc, Deputy General Director of FE Credit, said the company currently has about 15 million customers, with new loan balance from 4.5-7 trillion VND each month.

FE Credit - Vietnam’s No1 consumer finance company - holds more than 50 percent market share in its field and its customers are those who cannot borrow from banks. That means the demand for consumer loans remains large, he said./.