Peer to Peer Lending (P2P), under which lenders and borrowers connect via apps, has been developing rapidly in Vietnam.
Nguyen Thi Thinh, 20, a petty merchant in HCMC, said she borrowed money this way recently.
“I needed tens of millions of dong and I decided to use P2P lending service because of its convenience: no collateral is required, while you can get disbursement several hours after you contact lenders,” she said.
Asked how Thinh could contact the lender, she showed the URLs of tens of websites, namely tima.vn, doctordong.vn, huydong.com, canvaytien.info, SHA and Mobivi.
After registering to borrow money on Tima.vn, a reporter, who acted as a borrower, was told to send some necessary documents via Zalo or Facebook. He was informed that he would have to pay the interest rate of 18 percent per annum to the company, not including the consultancy fee.
The reporter, when contacting vaymuon.vn, was told that he would have to pay the interest rate of 1.5 percent per month, plus the fee of VND2,000 a day for every VND1 million worth of loan, and the interest rate and fee may change at different moments.
The borrower was also warned that if he cannot pay debts, the lenders will be able to take necessary measures to collect debts – making public about the debt, selling the debt to third parties or suing before the civil court.
Under current laws, only credit institutions have the right to mobilize and lend capital. This means that P2P is still outlawed. The State Bank has not licensed any company in the field.
Nguyen Tri Hieu, a banking expert, said P2P companies are not credit institutions, so they do not have to be put under the control of the State Bank of Vietnam.
However, they carry out activities of mobilizing and lending capital, as currency brokers, and must be put under professional control by the State Bank of Vietnam.
The businesses which act as intermediaries connecting lenders and borrowers argue that they don’t keep money, don’t trade money, and don’t get involved in the disbursement process.
They just need to have business registration in accordance with the Enterprise Law and follow the regulations on financing and credit.
However, an analyst warned that the risks in this field are very high as it is not under the state’s control.
Local newspapers reported that Le Thi Minh in Tan Phu district, HCMC, fell into the trap of a usury ring. She borrowed VND18 million at the interest rate of 2.99 percent per month and though she paid debts for seven months, she still owes VND14 million.