Customers "race" to default on debt, some finance companies have bad debt of up to 20%

ANTD.VN - "Easy to borrow, easy to default" - this is the mentality of many borrowers, leading to the proliferation of "default debt" groups on social networks, and bad debt of consumer finance companies has increased sharply in recent years.

Bad debt increases, more and more customers default on debt

This situation was pointed out by experts and businesses at the Workshop "Resolving difficulties in consumer lending - Repelling black credit", this morning, October 31.

According to Mr. Nguyen Quoc Hung, Vice Chairman and General Secretary of the Vietnam Banks Association (VNBA), as of August 31, 2023, the outstanding loans for life services of the whole system reached about VND 2,671,000 billion, accounting for 21% of the total outstanding loans of the economy , an increase of 0.35% compared to December 31, 2022, bad debt accounted for over 4%. Of which, the outstanding loans for life services of 16 financial companies were VND 135,945.36 billion (accounting for more than 5% of outstanding loans for life services).

Notably, according to Mr. Hung, the outstanding debt of these financial companies is on a downward trend, from about VND 20,000 billion in 2022, which is a decrease of about VND 65,000 billion. Meanwhile, bad debt is on an upward trend, from about 5% to 8-10%, with some companies having bad debt up to 20%. Many companies are in a difficult situation, even losing money due to having to set aside high provisions for bad debt risks.

“Bad debt is increasing day by day. In addition to the objective factors that are common difficulties, there are also subjective and very dangerous factors that have not been dealt with yet, such as customers intentionally not paying their debts, the previous person advising the next person not to pay their debts, even when company officials come to collect debts or remind them to pay, they oppose, denounce, and slander the officials as using aggressive measures to collect debts to the government.

Some subjects took advantage of the management agency's crackdown on illegal credit crimes and deliberately accused consumer finance companies licensed by the State Bank of being illegal credit organizations, so they did not pay their debts and established debt default groups on Zalo, Facebook... but were not punished" - Mr. Nguyen Quoc Hung stated the current situation.

Experts warn of borrowers' misconceptions about the problem of "debt default"

According to him, that situation leads to an increase in bad debts of consumer finance companies, debt collectors quit their jobs, and finance companies cannot continue to expand lending. People with low incomes and difficult circumstances cannot access loans from consumer finance companies... As a result, black credit has begun to rise. Although state management agencies have actively cracked down on many black credit groups, the situation is still very complicated in many sophisticated forms, especially in the online environment.

Establishing a group to "default on debt" can also be punished.

Also sharing the difficulties in debt collection, Ms. Nguyen Thi Minh Nguyet, Acting General Director of FE Credit, shared that if 2 years ago, the number of cases in which debt collectors of this enterprise were made difficult was only 2 cases, from the end of 2022 until now, it has become more serious, up to 24-25 cases.

The reason, according to her, is mainly due to the borrowers' lack of understanding. "They do not know the consequences of this behavior. They simply understand that if they like it, they will pay, if they do not like it, they will not pay. The loose legal corridor also causes difficulties for financial companies, causing psychological instability and confusion for debt collectors," said Ms. Nguyet.

Regarding the issue of “gangster” debt collection, according to the representative of FE Credit, for financial companies, in terms of policy orientation, no company will accept, allow or encourage such extreme forms of debt collection. However, she also admitted that during the operation, there will be employees who make mistakes and errors.

Therefore, this enterprise focuses on 3 solutions to limit this situation, which are: People (focusing on staff selection and professional training); perfecting processes; applying technology.

Explaining the widespread situation of "debt default" groups on social networking sites, experts all point out that the main reason is the borrowers' awareness.

Economist, Dr. Can Van Luc, said that, in addition to economic difficulties, consumer lending procedures are easy, anytime, anywhere, so borrowers feel that it is not formal or systematic, and they think that it is easy to "default on debt".

In addition, the level of financial awareness of Vietnamese people is still low (due to the newly developed consumer finance market and low financialeducation ); compliance and respect for the law are still modest; the executive apparatus is resolute but according to him, somewhere it is not continuous...

The cause also stems from the borrower's perception, lawyer Nguyen The Truyen, Thien Thanh Law Firm, said that currently on the internet there are many apps that pretend to be financial companies that lend money at high interest rates. Borrowers know that these apps never dare to go to the debtor's house, only call to threaten, which leads to the mentality of defaulting on debt. "If we can eliminate black credit, the defaulting on debt situation will be limited" - the lawyer said.

According to him, our legal system related to this issue is quite complete, from administrative to criminal handling. "Even for those who set up groups to "default on debt", there are regulations that those who provide false information can be administratively handled. If administrative handling is still done and they still deliberately violate or deliberately default on debt, they may be criminally handled," he said.

However, according to him, law enforcement is still somewhat limited. Almost no "debt default" cases have been brought to court, because consumer loans are usually small, while the human and financial costs for a case are too long, wearing down the efforts of businesses.

The lawyer suggested that the solution could be to discuss with the borrower the use of a judicial agency, commercial arbitration, which could potentially resolve the matter more quickly.

The enforcement of judgments also needs to be strictly enforced. Once there is a decision to enforce the judgment, any time the “debtor” has assets or money in his account, it will be collected immediately. If there is such an enforcement mechanism, the borrower will not dare to default on the debt.

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