Vietnamplus

It is critical to develop a proper legal framework for consumer credit to protect the legitimate rights of both borrowers and lenders, experts have said.

The COVID-19 pandemic is significantly changing the landscape of the consumer credit market as consumers tend to tighten their budget and pay more attention to healthcare, environment and lifestyle as well as switching to online shopping.

The competition to gain a larger share in the consumer finance market is heating up as rising capital demand before Tet (Lunar New Year) is an opportunity for both banks and finance companies.

Seeing the potential from a population of 96 million and the 2018 per capita GDP of 2,590 USD, Vietnamese banks are racing to develop retail markets.

Both finance companies and banks are promoting consumer lending to capitalise on high demands ahead of the country’s largest holiday Lunar New Year (Tet).

Increasing the limits of unsecured loans given by banks will prevent people from approaching loan sharks, an online conference hosted by the State Bank of Viet Nam (SBV) heard on December 26.

Consumer loans have increased sharply in Ho Chi Minh City in recent years, said Nguyen Hoang Minh, Director of the State Bank of Vietnam’s HCM City Branch.

The credit growth in November rose 2.8 percent against the previous month, pushing the total rise in the 11 months of this year to 15.3 percent.

Researchers at the Vietnam National University (VNU) – Hanoi have presented results of a consumer lending survey showing that the majority of Vietnamese people have never used a consumer loan.

Consumer lending by the end of May rose 29.7 percent against the end of 2016, the National Financial Supervisory Commission (NFSC) has said.

Consumer lending has potential for explosive growth in Vietnam, but this can only happen with significant improvements in consumer satisfaction with credit institutions and loan conditions, experts say.

Consumer lending is seeing only a slow rise ahead of Tet (Lunar New Year), despite commercial banks offering preferential loans to both individuals and enterprises, Dau tu Chung khoan (Securities Investment) newspaper reported.