Solutions to prevent the development of black credit

The increasing development of consumer finance, especially in rural areas, in collaboration with simplifying procedures for loan application would be effective solutions to prevent black credit.


These opinions were voiced by experts and representatives of companies at the consumer finance seminar themed “Developing consumer finance as a solution to ward off shadow banking” organised by VIR this morning.

According to statistics published by StoxPlus, 47 per cent of Vietnamese people have taken up loans, however, only 18.5 per cent of loans come from finance organisations, while the rest is from friends, relatives, and black credit organisations. The complex loan procedures are a major reason behind this situation. StoxPlus’ report also shows that rural and peri-urban areas with the total population of 60 million people are most at risk of black credit because credit organisations have fewer opportunities to approach consumers in these areas.

In order to deal with this problem, Tran Minh Hai, manager of Basico law firm, stated that, “It is necessary to licence more financial organisations to meet people’s increasing demand for loans. Borrowing money is a practical demand of people and both foreign and local financial organisations are willing to meet this demand.”

Tran Kim Anh, financial and banking expert, said that financial organisations need to expand their operations to areas where banks cannot fully cover people’s consumer finance needs, which are also hot spots of black credit.

Along with the expansion of consumer finance networks, it is necessary to complete the legal framework in order to harmonise the benefits of people and financial organisations, accordingly people will find it easier to approach loans from financial organisations that comply with international and local regulations.

The Vietnamese consumer finance market has a golden opportunity for development with ideal conditions, such as a developing economy, a 95-million-strong population, 52 per cent of whom are of working age, and increasing incomes, as well as a marked shift from saving to shopping and from cash to consumer credit.

The development of consumer finance is motivation for the growth of the economy, accelerating the circulation of goods on the market, allowing people to approach credit, especially customer groups under the banks’ lending standards, restricting black market credit, and supporting low-income people from improving their life.


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