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Online black credit booms with high demand   2010-03-08 - VNE

While commercial banks deny loans and tighten credit, many individuals and organizations have plenty of money and promise to lend as much as demanded, but with high lending interest rates.

 

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“Five trillion dong in capital is ready. Procedures are very simple. The lending interest rates are very attractive.” This is how one internet ad reads.

 

Another claims: “If you need money to expand your business, or if you want money for consumption needs, please come see me. I can offer many methods for you, which can help you borrow the sum of money you want, with or without mortgaged assets.” The person who posted the ad stated frankly that he has close relationships with the banks and so can provide as much money as demanded.

 

In replies to an ad offering 50 billion to one trillion dong, there are multiple entries below it, asking about procedures and interest rates. A person wrote that he lives in Hai Phong and wants to borrow money to breed fish. Another wants cash to develop a real estate project in HCM City. Some just need tens of millions of dong in capital, while other said they need billions.

 

Minh, a client who once contacted the advertisers, admitted that she never could borrow money from them because of the exorbitantly high interest rates. Instead she has to work with commercial banks, even with their complicated procedures.

 

Hai, a contractor, once had to use the ‘overnight lending’ service. At that time, he urgently needed 500 million dong to pay salaries.

 

He signed on to borrow the money at four percent.

 

“However, when filling out the documents, lenders required 10 percent more which they called ‘the document fee’. As I needed  the sum of money urgently, I had to pay 50 million dong more,” he revealed.

 

In advertisements, many introduce themselves as coming from big financial institutions, but offer quite different interest rates. A man called Trung at 093625xxx said he is from Prudential and can lend at 1.2-1.8 percent per annum. Others claimed to be from Prudential too, but will lend at over 3 percent.

 

The demand for ‘black credit’ is high. Tung, a civil engineer in Hanoi, said that he needs a big sum of money urgently for his business.  He remarked that borrowing on ‘black credit’ is playing with fire, but Tung believes that the business deal will bring him a hefty profit.

 

It is quite a surprise that not only individuals, but also institutions borrow money this way. One business representative mentioned that his company must use black credit to pay bank debts and then obtain a new loan with a lower interest rate.

 

Why do these people have so much money to lend? Some explain that they gather capital from relatives. Some others boast of their close relations with banks. Others have idle money from selling off big assets.

 

Dao Minh Tuan, Deputy General Director of Vietcombank, admitted that the online black credit market has been booming because demand is high and commercial banks cannot cover it.

 

Tuan warned that both lenders and borrowers have to bear high risks. The lenders do not know the financial capability of borrowers, while borrowers always must pay extreme interest rates.

 

State Bank of Vietnam Hanoi Branch Deputy Director Nguyen Van Hung acknowledged that the watchdog agency knows about the black credit and is discussing the measures to deal with them. Hung emphasized that only licensed banks and credit institutions are permitted to borrow and lend capital.



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