Bank credit gets stuck, black credit prospers

Aug 9th at 12:32

09-08-2012 12:32:41+07:00

Since businesses cannot access official credit sources, they have to borrow money on the black market. It’s now the golden age for loan sharks to do business.

Money at hand, but interest rates exorbitant

Those, who pass the Nga Tu So cross-road in Thanh Xuan district in Hanoi in the afternoon, would be given the leaflets with the ad pieces about lending big sums of money with simple procedures. The lender, Chovay…, promised to lend at “very low interest rate”: borrowers just have to pay 1500 dong per day for every one million dong they borrow, or 0.15 percent per day.

The interest rate advertised as “very low”, in fact, is exorbitant, 55 percent per annum. Meanwhile, the lending interest rates applied by commercial banks are not higher than 15 percent per annum.

There are a lot of private lenders and pawnshops in Hanoi. However, Chovay… is considered the biggest private lender with the advertised profuse capital of up to multi-billions of dong which is ready for disbursement at any time.

Especially, Chovay…proves to be a competitive lender when promising to lend money without the requirement on mortgaged assets in some cases. Especially, the lender has a lot of offices located in different areas of Hanoi.

When VTC’s reporters came to an office of Chovay… on Truong Chinh Street in Thanh Xuan district, they were welcomed warmly. An officer here said the procedures for disbursement are very simple. Borrowers just need to show a copy of necessary documents to get disbursement immediately.

Especially, the procedures are so simple that borrowers would be able to borrow money, even if the real estate ownership certificates bear others’ names, provided that the borrowers can present the photocopied version of the identity cards of the owners.

When asked why the interest rates were so sky high, the officer affirmed that the interest rate offered by Chovay… is the lowest in Hanoi. Other private lenders would charge 0.35 percent per day.

“The disbursement procedures are very simple. If you really want to borrow loans, you will get money immediately. Meanwhile, you will have to wait many months long, if you seek loans from banks,” the officer said.

High services still can attract borrowers

Though the lending interest rates are sky high, Chovay… still can attract a lot of borrowers. The branch on Truong Chinh Street received seven guests asking for the information about the loans just within 10 minutes.

Of the seven guests, three seemed to be the loyal clients. Therefore, they did not raise too many questions. They just showed the documents, got money and left.

Nguyen Van An, 20, from Hai Duong province, said that he is a familiar client at Chovay…. An said he chooses Chovay…, because the interest rate here is the lowest.

“One month ago, I once pawned my Honda motorbike at a pawnshop in Thanh Xuan district at the exorbitant interest rate of 0.55 percent per day,” he said.

Tung, another borrower, introduced himself as the director of a second hand goods trading company, said he never thought before that he would seek capital on the black market one day.

However, he now has a big sum of money urgently, and he has no other choice than contacting Chovay….

Declining to reveal the sum of the loans, but Tung said he has to pawn the red book (the land use right certificate) for the house he lives in and the company’s car for the loans.

Tung said he knows the bank loan interest rates are not higher than 15 percent, but he cannot access the loans.

“It’s nearly impossible to approach bank loans. I asked for a loan two months ago, but I was told to wait, even though our finance report shows very good business result,” Tung said.