Dec 10, 2018 / 09:16

Legal loopholes prevent usury from being wiped out in Vietnam

The Hanoitimes - Lending at exorbitant interest rates is listed among infractions of banking regulations but not in criminal code.

Police forces are unable to wipe out usury in Vietnam due to regulations that restrain their handling, according to Major General Phan Anh Minh, deputy director of Ho Chi Minh City’s Police Department. 
Illustrative photo
Illustrative photo
A person illegally profiting more than VND100 million (US$$4,347) will be sentenced to three years in jail without temporary detention, Minh said. 

Legal regulations have prevented the police forces from thoroughly handling the cases despite more aggressive threats facing borrowers. In Ho Chi Minh City, for example, nearly 900 people are identified to involve in predatory lending but most of them are fined for administrative breaking charges only.  

Cases caused by loan sharks are usually serious as they are involved in assault, deliberate body violence, property destroying and extortion, and murder, the officer said. 

In Vietnam, the practice of making unethical or immoral monetary loans becomes rampant. It has not only unfairly enriched the lenders but left many people miserable and maltreated. 

Usury and its impacts are so thorny that the National Assembly (NA)’s deputies have continuously raised concerns about. 

Minister of Public Security To Lam at an NA’s session admitted that usury, literally is civil deals but backed by criminal gangs. From April 2015 to 2018, the ministry reported more than 7,600 usury-related cases, including 56 murder cases. 

Experts said that wiping out usury is not an easy task as according to the World Bank (WB), around 70% of Vietnamese people are unable to access bank loans.

The Vietnamese Civil Code forbids any loans with interest rate exceeding 20% per annum while the Criminal Code stipulates that any person giving loan with interest rate exceeding fivefold the ceiling established by the Civil Code would be handed with jail sentence.