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Loan sharks feed off poor, naive workers

Update: September, 11/2015 - 09:20
A leaflet on private loan service. Many poor workers have difficulty borrowing money from banks due to complicated red tape, so they are forced to borrow at high interest rates from private lenders. — Photo vsoha.vn

HA NOI (VNS) — Many poor workers have difficulty borrowing money from banks due to complicated red tape, so they are forced to borrow at high interest rates from private lenders.

Nguyen Thi Le, lives in Ha Noi's Long Bien District, told the Lao dong (Labour) newspaper that she borrowed VND150 million (US$6,600) from a woman named Yen.

Yen called herself director of a private company and persuaded Le to sign a commitment to move Le's land-use rights to Yen as security. Then Yen disappeared with all of Le's certificates after giving her VND80 million ($3,500).

Senior lieutenant-colonel Tran Thi Thuy, from the Police General Department, said that lending money for high interest was illegal. He said it had led to hundreds of bankruptcies and the loss of thousands of billions of dong.

The bankruptcies were also associated robberies by desperate business people. This had led to 41 murders and 588 robberies from 2010 to 2014. Recently, Thuy said, financial companies were allowed to lend money using simplified procedures. However, some workers still lamented that the interest rate was as high as the illegal lenders.

The finance companies offer interest rates of VND1,500-2,000 ($0.06-0.08) per million dong per day.

Tran Thi Hong Hanh, general secretary of the Viet Nam Banking Association, said that catching illegal lenders was difficult, so the better measure was prevention.

He said poor workers who did not have stable jobs and property to put up as security to borrow money from banks and financial companies should be given more knowledge about illegal high interest rate.

He said the Viet Nam Bank for Social Policies and other organisations offering credit funds should be expanded to help low-income workers.

Hanh also proposed that the Ministry of Industry and Trade take more control over pawnshops.

Hanh said that the Civil Code banned lending money for high interest, but did not regulate punishment for it, whereas the Penal Code stated that the highest sentence for violations was three years. — VNS

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