The State Bank of Vietnam (SBV) warned the form of peer to peer lending (P2P), under which lenders and borrowers connect via apps, is being exploited for money lending at sky-high interest rates, far exceeding the ceiling rate of 20% per year pstipulated in the Civil Code.
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Moreover there remains unclear about the profit and risks for concerning parties involved in this lending model, according to the SBV. In case of dispute, lenders may lose their money, as P2P companies are not bound to ensure the rights of users.
The SBV also pointed to potential threats of leaking privacy data, cyberattack, lending used for money laundering and tax evasion.
In some cases, P2P companies are using its platform as a way of mobilizing capital with high interest rates, known as multi-level marketing.
The SBV stressed that abusing the P2P lending platform for capital mobilization by individuals or organizations is illegal.
The act of mobilizing capital through credit institutions must follow the Law on Credit Institutions and Law on the State Bank of Vietnam. However, the online P2P lending is considered civil transaction and out of the jurisdiction of those two laws.
The SBV warns citizens and enterprises to remain cautious about participating this lending platform, while encouraging people to access capital through the banking channel.
Additionally, the SBV is working with relevant government agencies for a legal framework managing the P2P lending and new transaction model on digital platform.
