Vietnam tightens consumer loans
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Vietnam has tightened rules on consumer loans, requiring a progressive decline in their ratio in the coming years.
Cash loans cannot exceed 70 percent of a finance company’s total loans for consumer durables starting 2021, according to a decree issued recently by the State Bank of Vietnam (SBV).
The ratio will drop to 60 percent in 2022, 50 percent in 2023 and 30 percent in 2024.
Finance companies can only disburse cash loans for customers without bad debt records with the National Credit Information Center under the central bank. The decree is set to take effect on January 1, 2020.
Competition has intensified in the consumer loans division as new players enter the market. Vietnam had very few finance companies in 2015, but as of June this year 16 firms had received permission to operate, not counting alternate lending and pay-day loan platforms, SBV data shows.
FE Credit, the biggest player so far, accounts for 47.3 percent of the market, followed by Home Credit with 16.9 percent and HD Saison with 10.1 percent, according to financial data provider FiinGroup.
However, finance companies’ revenue growth has been slowing down, from 87.4 percent in 2015 to 15.3 percent last year, it said.
Outstanding consumer loans amounted to 19.7 percent of Vietnam’s total outstanding last year, up 3 percentage points from 2017, FiinGroup added.
Questions & Answers
Q.What specific new rules has Vietnam introduced regarding consumer cash loans?
What specific new rules has Vietnam introduced regarding consumer cash loans?
Starting in 2021, cash loans cannot exceed 70 percent of a finance company’s total consumer durable loans. This ratio will progressively decrease to 60 percent in 2022, 50 percent in 2023, and 30 percent in 2024, as per the new decree.
Q.When do these new regulations on consumer loans come into effect?
When do these new regulations on consumer loans come into effect?
The decree issued by the State Bank of Vietnam (SBV) is set to take effect on January 1, 2020. The progressive decline in the cash loan ratio begins the following year.
Q.How has the consumer loans market in Vietnam changed in recent years?
How has the consumer loans market in Vietnam changed in recent years?
The market has seen increased competition, with 16 finance firms now permitted to operate, up from very few in 2015. However, revenue growth for these companies has slowed significantly from 87.4 percent in 2015 to 15.3 percent last year.
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