The State Bank of Vietnam (SBV) has warned Vietnamese credit institutions and foreign banks in the country to be cautious before working with peer-to-peer (P2P) lending companies as there are many risks related to the service.
Vietnam hasn’t issued a law on P2P lending and the model has many potential risks. (Photo: thoibaonganhang.vn)
In a document sent to lenders this week, the SBV said the fourth Industrial Revolution has promoted the development of many new products and services, including P2P lending, which directly connects borrowers with lenders.
According to the central bank, P2P lending can create a new capital supply channel and contribute to promoting financial inclusion, but it also has many potential risks that have been experienced across the world.
“Vietnam hasn’t issued a law on P2P lending while the model has many potential risks, such as tax evasion, money laundering, terrorist financing and theft of personal information, which may cause socio-economic instability,” the SBV noted.
Due to the risks, to ensure the safety of the banking system, the SBV asked credit institutions to research the lending model so as to be aware of risks that might arise.
The SBV noted, credit institutions must be especially cautious about signing and implementing agreements with P2P lending companies to ensure they are in accordance with the law and don't affect their operation and reputation, as well as the reputation and safety of the entire banking system.
"During co-operation with P2P lending companies, credit institutions must require the companies to publicise accurate, transparent and honest information about the co-operation and transactional contents between the two sides,” the SBV stated in the document.
In addition, the central bank also told credit institutions to monitor the publication of information about the co-operation to promptly disclose false or inaccurate information that may cause harm to consumers and related parties for proper handling.
The SBV said it was carefully studying international models of P2P lending to develop a legal framework to manage the country’s nascent fintech sector.
SBV Deputy Governor Nguyen Kim Anh said a legal framework could bring out the positive aspects of this service, while minimising risks and ensuring safety for individuals and enterprises, thereby enhancing financial inclusion in Vietnam.-VNS