Unsecured small loan threshold to be raised from August 15

Unsecured small loan threshold to be raised from August 15

Small loans will be capped at VNĐ200 million for people's credit funds and VNĐ400 million for all other credit institutions, from the current maximum of VNĐ100 million.

Transaction at the Vietnam Bank for Social Policies (VBSP), Hưng Yên branch. For small loans, lenders are permitted to disburse funds without requiring customers to submit documents proving their financial capacity or a feasible plan for using the borrowed funds — VNA/VNS Photo Mạnh Khánh

The threshold for simplified bank loans will be raised to VNĐ400 million (US$15,300) from VNĐ100 million starting in August, meaning that borrowers could access lower-value credit without submitting documents proving their financial capacity or detailing how the funds will be used.

Under Circular 29/2026 issued by the State Bank of Vietnam (SBV) on June 30, which amends lending regulations under Circular 39/2016 on loans by credit institutions and foreign bank branches, small loans will be capped at VNĐ200 million for people's credit funds and VNĐ400 million for all other credit institutions.

The new rules take effect from August 15, replacing the current VNĐ100 million ceiling applied across the banking sector.

For small loans, lenders are permitted to disburse funds without requiring customers to submit documents proving their financial capacity or a feasible plan for using the borrowed funds to streamline approval procedures and improve access to credit.

The central bank said the higher threshold better reflects current financing needs, as the size of consumer loans and borrowing by households, household businesses and micro-enterprises has increased significantly.

Statistics cited by the SBV show that the average outstanding loan per customer at people's credit funds was close to VNĐ300 million as of the end of March 2025, suggesting the previous VNĐ100 million threshold no longer reflects actual borrowing needs.

Expanding small-value lending would also support the banking sector's digital transformation strategy and the development of electronic lending services, the SBV said.

Nguyễn Quang Huy from the Faculty of Finance and Banking at Nguyễn Trãi University said the higher threshold reflects changes in prices, production costs and financing needs in the past few years.

He said many small household businesses now need several hundred million Vietnamese đồng to purchase inventory, invest in equipment or maintain operations, so requiring them to complete the same documentation as for much larger loans could delay access to capital and reduce business flexibility.

Easier access to formal credit could help curb informal lending by providing borrowers with a faster alternative to unregulated financing channels, he noted, adding that the higher threshold is expected to create more room for online lending, as smaller loans often require rapid approval and disbursement.

The circular also changes debt collection rules by requiring banks to recover overdue principal before collecting overdue interest. Previously, lenders and borrowers could agree on the order of repayment.

According to financial research firm FiinGroup, Việt Nam's consumer finance market still has considerable growth potential, with consumer credit accounting for just over 10 per cent of gross domestic product. This figure is well below levels in other markets, such as the Republic of Korea  (40 per cent) and Hong Kong (20 per cent).

SBV data shows outstanding consumer loans have reached about VNĐ3 quadrillion, accounting for more than 20 per cent of total credit in the economy. 

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