To eliminate ‘black credit’, experts are urged to set up policies to encourage the establishment of finance companies which allow more clients to access consumer loans.

The State Bank of Vietnam (SBV) also encourages credit institutions to develop healthy consumer credit products, especially products for industrial production and populous areas.

The agency reported that as of the end of 2019, there were 16 operational finance companies, including ones belonging to commercial banks, such as FCCOM, FE Credit, HD Saison, SHB Finance, MCredit and PTF.

Trinh Doan Tuan Linh, a finance expert, commented that the establishment of finance companies as subsidiaries of commercial banks partially helps the consumer lending market develop more strongly and effectively.

Banks set up finance companies to specialize in consumer lending, because this type of lending mostly covers small loans. In general, consumer lending can bring higher profits than other types of lending. 

The number of consumer loans has been increasing rapidly, but the legal framework to control the activities is not strong.

However, problems in consumer lending have arisen, including exorbitant interest rates and debt collection by "gangsters".

Meanwhile, supervision over lending and debt collection activities has been carried out slowly.

Linh, noting that Zalo provides consumer lending packages under Zalo Bank under business cooperation with credit institutions, pointed out that there is ‘something unclear’.

Zalo is just a partner, in charge of introducing products and bringing clients to finance companies. It is finance companies which decide whether to lend, while Zalo’s tools cannot provide loans.

“In this case, Zalo just acts as a bridge. It doesn’t have the function of a lender,” he said.

With banks’ apps, small loans are approved automatically. When customers leave their personal information on banks’ websites, the information will go to banks’ database where the information is analyzed before banks decide whether to provide loans.

With the support of high technologies, the process of applying for loans and loan approval can be shortened.

This means that lenders still follow strict procedures when considering loans, but the time to follow the procedures has been shortened thanks to technology.

Kim Chi 

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