Vietnam’s central bank takes measures to curb illicit lending

09:07 | 14/03/2019 Economy

The State Bank of Vietnam (SBV) has said it will direct banks to increase their agricultural and rural lending in order to prevent black-market lending, which has been the source of scores of criminal cases in recent years.

The State Bank of Vietnam's conference on measures to curb black market lending

The banking sector has been making a strong effort within its jurisdiction to curb illicit lending but cooperation from the parties concerned is required for the effort to be more effective, said SBV Deputy Governor, Dao Minh Tu.

He added that special credit programs for agricultural and rural development and consumer credit products suitable with everyone, especially those in remote areas, will be introduced.

According to Nguyen Quoc Hung, head of the SBV’s credit department, there are two groups of people seeking loans from the black market.

The first group borrow money for illegal purposes such as gambling and betting and the second group are those in urgent need of funds but who are unable to secure loans from banks.

Hung said although there are up to 78 banks and financial companies, as well as thousands of people’s credit funds, lending on the black market remains a serious problem, especially in the Central Highlands and southern provinces.

Deputy Director Pham Toan Vuong of Agribank, the most popular bank in rural areas, suggested that other banks should also join the effort to meet the people’s urgent and legitimate demand for credit.

He also called for the introduction of a dedicated policy on consumer lending with clear regulations on interest rates, collateral assets, proof of loan purposes and a dedicated risk resolution mechanism.

According to statistics released by public security agencies, the last four years have seen more than 7,600 criminal cases related to black-market lending in Vietnam, including 170 cases of credit fraud.

Theo NDO