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BANKING & FINANCE

Legal backing sought
Debt recovery services need a legal framework
due to the complex nature of the endeavor.

By TRAM ANH

hile consumer lending debt has 2024 reached unprecedented lows, and tain times, people tend to refrain from
declined, with certain banks wit- were even worse than in the challenging spending and borrowing, instead opting
W nessing a significant 40 per cent Covid-19 era. While general lending began to invest in secure assets.”
fall in non-performing loans, bad debts to rebound in April, consumer credit He emphasized the vital role consumer
continue to increase overall, especially remains stagnant, with a reported decline lending plays as a catalyst for economic
those incurred by various consumer finance of approximately VND70 trillion ($2.7 bil- revitalization and as a pivotal source of
providers. Several suggestions have lion) in the first quarter. capital. Consumer lending serves as an
emerged to address the complexities of indispensable tool in realizing Vietnam’s
debt management and collection in Viet- Lending down as bad debts rise comprehensive financial strategy by 2025
nam, such as expanding legal avenues for Drawing on practical examples from and its vision for 2030, as it uniquely pen-
debt recovery services, streamlining debt TPBank’s operations, Mr. Quan highlighted etrates into remote and underserved regions.
trading, and establishing a credit scoring a significant reduction in consumer lending, Furthermore, consumer credit, facilitated
system for individuals. of around 40 per cent compared to the through established channels in commercial
Mr. Nguyen Hong Quan, Member of end of 2023. “Public sentiment has been banks and consumer finance firms, holds
the Vietnam Banks Association and Deputy affected by global tensions, particularly significant importance in curbing informal
General Director of TPBank, noted that the recent escalation of conflict in the lending practices. Mr. Quan then posed a
the credit situation in the first quarter of Middle East,” he explained. “During uncer- pertinent question: Despite its crucial role,

“A reliable system for assessing
citizens’ creditworthiness is
essential. The State Bank of
Vietnam is working with the
Ministry of Public Security to
introduce a reliable credit scoring
solution, which would enable
swift and efficient access to loans
by credit-worthy individuals.”

Mr. Nguyen Hong Quan
Member of the Vietnam Banks Association
and Deputy General Director of TPBank

34 Vietnam Economic Times May 1, 2024 en.vneconomy.vn