JavaScript is off. Please enable to view full site.

Southern Vietnamese cut deals with loan sharks at exorbitant rates

Southern Vietnamese cut deals with loan sharks at exorbitant rates

Tuesday, February 23, 2016, 11:50 GMT+7

Activities relating to usury are becoming more common in Ho Chi Minh City, resulting in serious financial hardship and increasing the potential for crime, with police so far unable to stop it.

Leaflets advertising money lending services are often seen in the streets across the southern city featuring taglines like “borrow money with no hassle” or “get a loan in 30 minutes,” among others.

Similar solicitation can also be found on the Internet, describing money transfers carried out after just one phone call.

As part of an investigation, Tuoi Tre (Youth) newspaper reporters have managed to contact a man named B. residing in Tan Binh District, who admitted to being a member of a local loan shark group.

People they know will pay an inertest rate of 10 percent per month, while the average rate of 20 to 30 percent will be applied to others, B. explained.

“Procedures are simpler for smaller amounts of money. People who borrow more than VND100 million [US$4,473] will need to have their ID, personal background checks and their photos taken for our members to ‘deal with’ them when they fail to pay the cash back,” he said.

When the reporters approached a man named Ch. in Go Vap District, who works as an intermediary and gets paid by commission, they were quickly told by the man, “You have found the right place, our services are very convenient.”

Besides average interest rates ranging from 20 to 30 percent, loanees also have to pay an extra amount of VND1 million ($44.73) to mediators, Ch. elaborated.

The man said that the usurers he represents offer a maximum loan amount of VND100 million.

There are several ways for debtors to pay the money they owe, T., a debt collector in District 12, said. The most straightforward are to either return the original loan amount along with the accumulated interest at a specified time, or pay their interest on a daily basis.

Unlike banks and financial companies across the country, usurers do not usually demand certain requirements from their borrowers in terms of proof of personal incomes, stable careers, or how they will spend the money, said Nguyen Hoang Minh, deputy director of the Ho Chi Minh City branch of the State Bank of Vietnam.

Clients of these services are mainly poor families who have limited financial capacity to receive loans from banks, people who need money urgently, or those who 'rob Peter to pay Paul,' Minh elaborated.

He added that loan sharks usually run their operations in rural areas or in markets where many merchants and runners of small businesses are often in need of quick and easy loans.

Besides poor people, gamblers are also frequent users of these services, according to a financial expert.

Aside from the extortionate interest rates, borrowers can easily fall victim to certain crimes, including property appropriation, illegal arrest, attempted assault, and many others, if they fail to return the money, said Colonel Nguyen Sy Quang, chief of staff at the Ho Chi Minh Department of Police. 

It is not easy for officers to solve these cases, Col. Quang stated, adding that loan sharks know how to take advantage of the loopholes in the law, posing difficulties for police to gather the necessary evidence of their unlawful activities.

Under the 2015 Penal Code, which will take effect on July 1, loaners who set interest rates that are five times higher than the ones promulgated by the government will face financial penalties worth between VND50 million ($2,234) and VND1 billion ($44,680) or up to three years in prison, according to Nguyen Van Hau, vice president of the Ho Chi Minh City Lawyers Association.

Like us on Facebook or follow us on Twitter to get the latest news about Vietnam!

Tuoi Tre News

Read more

;

Photos

VIDEOS

‘Taste of Australia’ gala dinner held in Ho Chi Minh City after 2-year hiatus

Taste of Australia Gala Reception has returned to the Park Hyatt Hotel in Ho Chi Minh City's District 1 after a two-year hiatus due to the COVID-19 pandemic

Vietnamese woman gives unconditional love to hundreds of adopted children

Despite her own immense hardship, she has taken in and cared for hundreds of orphans over the past three decades.

Vietnam’s Mekong Delta celebrates spring with ‘hat boi’ performances

The art form is so popular that it attracts people from all ages in the Mekong Delta

Vietnamese youngster travels back in time with clay miniatures

Each work is a scene caught by Dung and kept in his memories through his journeys across Vietnam

Latest news