Social Affairs
Consequences of “black credit”
In recent years, along with the economic development, many insolvency cases occur due to the rampant “black credit” both in term of scale and complexity.
This, in turn has caused heavy consequences with regard to socio-economic and public order.
Exorbitant interest rate
“Black credit” can be seen as unofficial credit service, which is banned by the law and not related to the banking system. The nature of this service is mutual trust between lenders and borrowers, while capital mobilization with interest rates 10 times higher the maximum rate allowed. However, it requires simple procedures and easily meets people’s quick demand for urgent needs.
As transaction happens between individuals, but not through official credit institutions, so it is difficult to deal with, and only when the victim submits complaint to the authority. Besides, relationship between lenders and borrowers is under civil dispute, so that the authority can hardly intervene. As such, the interest rate is negotiated between two parties without the ceiling rate, and to borrow money, one only need a student ID card or an ID card.
In Hanoi, the current interest rate for “black credit” is around 3,000-5,000 VND for 1 million VND per day (equivalent to an interest rate of 20% per month). This rate is 10 times higher than the rate offered by any bank at the moment.
At districts where students or poor people are resident such as in Dong Da, Ha Dong, Cau Giay, it is hardly not to notice advertisements for black credit posted on the wall with attractive invitation. Payment is also quite flexible, such as: pay interest in each 10 days or daily. However, with the interest rate of 3,000-5,000 VND for 1 million VND per day, lenders face the risks of not being able to settle their debts and with heavy consequences follow.
Freshman at Finance Institute – Nguyen Van Tan said, due to the urgent need of having 5 million VND, he went to “black credit”. After that, he got the amount needed with the interest rate of 3,000 VND for 1 million per day. However, only 3 months after can he repay the debt. This time can he understand the exorbitant interest rate, with the total interest and principal amounted to 7 million VND.
Meanwhile, going to an address offering “black credit”, the report met with Nguyen Van Th. He said, in this service, if people have known for long time, they can lend money with interest rate of 10% per month, otherwise, the interest rate can go up to 20%-30% per month.
Hard to deal with
According to the police, despite the simple and convenient procedures of lending, there remains many tricks hidden behind, which are difficult for lenders to notice. The consequences of lending money through “black credit” are not only of having exorbitant interest rate, but also lenders are forcefully taken over their assets or faced danger to their lives.
In order to restrict “black credit” activities, Dr. Nguyen Tri Hieu – financial expert said, if the rightfully demand of citizens for lending money is met by credit institutions, there will be no chance for “black credit” to flourish. As such, banks expand subjects being able to get loan will narrow the chance for unofficial credit service to develop.
Besides, developing trust lending for customers not qualified for lending at banks (customers with low or middle income) through consumer loans can be an appropriate solution. As this will direct citizens in to an official and transparent financial market with the state management.
Exorbitant interest rate
“Black credit” can be seen as unofficial credit service, which is banned by the law and not related to the banking system. The nature of this service is mutual trust between lenders and borrowers, while capital mobilization with interest rates 10 times higher the maximum rate allowed. However, it requires simple procedures and easily meets people’s quick demand for urgent needs.
Rampant advertisement on "black credit".
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In Hanoi, the current interest rate for “black credit” is around 3,000-5,000 VND for 1 million VND per day (equivalent to an interest rate of 20% per month). This rate is 10 times higher than the rate offered by any bank at the moment.
At districts where students or poor people are resident such as in Dong Da, Ha Dong, Cau Giay, it is hardly not to notice advertisements for black credit posted on the wall with attractive invitation. Payment is also quite flexible, such as: pay interest in each 10 days or daily. However, with the interest rate of 3,000-5,000 VND for 1 million VND per day, lenders face the risks of not being able to settle their debts and with heavy consequences follow.
Freshman at Finance Institute – Nguyen Van Tan said, due to the urgent need of having 5 million VND, he went to “black credit”. After that, he got the amount needed with the interest rate of 3,000 VND for 1 million per day. However, only 3 months after can he repay the debt. This time can he understand the exorbitant interest rate, with the total interest and principal amounted to 7 million VND.
Meanwhile, going to an address offering “black credit”, the report met with Nguyen Van Th. He said, in this service, if people have known for long time, they can lend money with interest rate of 10% per month, otherwise, the interest rate can go up to 20%-30% per month.
Hard to deal with
According to the police, despite the simple and convenient procedures of lending, there remains many tricks hidden behind, which are difficult for lenders to notice. The consequences of lending money through “black credit” are not only of having exorbitant interest rate, but also lenders are forcefully taken over their assets or faced danger to their lives.
In order to restrict “black credit” activities, Dr. Nguyen Tri Hieu – financial expert said, if the rightfully demand of citizens for lending money is met by credit institutions, there will be no chance for “black credit” to flourish. As such, banks expand subjects being able to get loan will narrow the chance for unofficial credit service to develop.
Besides, developing trust lending for customers not qualified for lending at banks (customers with low or middle income) through consumer loans can be an appropriate solution. As this will direct citizens in to an official and transparent financial market with the state management.
