VietNamNet Bridge – In an effort to issue more credit cards, commercial banks loosened their requirements on card holders. And now they suffer from the easy requirements.

One person holds 3-4 credit cards

Not having a high spending demand, Nguyen Minh Khang, a former worker of a real estate firm in Ha Dong district in Hanoi still has 3 credit cards in his wallet. The cards are issued by three different commercial banks which offer the spending limits of up to hundreds of millions of dong.

Khang said he got the cards several years ago, when the real estate market in its golden age brought him attractive monthly income. Therefore, Khang was the VIP client of many banks.

As the real estate market has got frozen, Khang has become unemployed and tried to fasten his belt. However, Khang said he still receives the offers from credit officers to register credit cards at their banks.

The current regulations do not stipulate how many credit cards a person can hold at maximum. Nguyen Thanh Nga, a marketing officer of a private hospital in Hanoi, also has 3 credit cards.

“I told them (banks) that I have 2-3 credit cards already. But they said “no problem”. I just need to prove that my income is high enough to meet the requirements of the banks,” Nga said.

According to Nga, clients just need to show the statements about their monthly income and other documents (identity cards, permanent residence certificates and labor contracts) to be able to open credit cards.  

“The procedures are very simple. Some banks may send their staff to your houses to serve you,” she added.

A senior executive of a commercial bank confirmed that every client can hold one or many cards issued by the same banks or by different banks. Clients would get credit cards just after 5-7 days of submitting necessary documents. The spending limits would depend on the clients’ monthly incomes.

Credit cards produce bad debts

Economists, while saying that the development of personal credit is a positive sign of the national economy, has warned that the credit cards issued under the easy conditions will produce bad debts and worsen the bad debt panorama.

They said the high fees and interest rates applied by the banks will not be able to cover the high risks which have increased in the context of the economic recession.

In HCM City alone, some 20 credit cards have been issued, which means that every city dweller holds 2-3 cards. The bad debt ratio from credit cards now just accounts for one percent of the total bad debts, but the ratio has been increasing rapidly.

A representative of a bank said that banks don’t re-check the clients’ incomes and assets when re-issuing cards. Meanwhile, it is highly possible that clients lose their jobs or have their income decreasing. In a worse case, the enterprises where they work get bankrupt and cannot pay to workers.

It happens in fact, that credit card holders withdrew money from their credit card accounts to pay to their workers, even though the cash withdrawal fee is as high as 6-7 percent per annum.

“It must be problematic when clients try to borrow money at any costs,” the bank officer commented.

D. Anh