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This proposal is part of the draft Circular amending and supplementing certain provisions of Circular 39 regarding lending activities of credit institutions.
Accordingly, the current definition of small-value loans is those with a value of 100 million VND or less, which is expected to be raised to 400 million VND when borrowing from credit institutions and 200 million VND when borrowing from people’s credit funds.
With these small-value loans, according to the Law on Credit Institutions, credit institutions currently do not require customers to provide documents or data proving financial capability or a feasible capital usage plan as with other loans.
The increase in the limit for small consumer loans by the State Bank aims to align with the current economic context. Specifically for people’s credit funds, it needs to be separated from credit institutions to suit the specific characteristics of operational scale and financial capacity…
In addition, the new draft also mentions that if lending is done through electronic means, the credit institution is responsible for its own risks and is allowed to self-regulate specific lending limits for each customer.
This change is based on the recommendations of credit institutions as they rely on their risk appetite and technological resources, wanting to self-determine the ceiling and take responsibility for arising risks.
According to the assessment of the State Bank, this is reasonable in the context of rising living costs and the increasing demand for loans often exceeding 100 million VND. The limit on lending at this level does not fully meet the capital needs of the people and is not suitable for the development of financial technology (fintech).
Expanding lending services through electronic means is seen as an inevitable trend in the digital transformation strategy of the banking sector. Therefore, the proposal to remove the ceiling limit on online lending will help people easily access credit capital, transparently through electronic channels, and limit black credit. At the same time, this regulation also helps customers reduce transaction costs, save travel time, and increase flexibility in electronic lending.
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