According to the SBV, the fourth industrial revolution has promoted the development of many new products and services, including P2P lending, which is designed and developed on the basis of digital technology to directly connect borrowers with lenders (investors) without going through financial intermediaries such as credit institutions or foreign bank branches.
The development of P2P lending has created a new capital supply channel in the global market and contributed to promoting financial inclusion, but it also has many potential risks that have been experienced all over the world.
This form of lending is fertile ground for high-tech crimes and fraud, such as tax evasion, money laundering, terrorist financing and theft of personal information.
In Viet Nam, there have recently appeared several service providers with similar models to P2P lending companies. But, operations of such companies have some shortcomings. For example, they make false advertisements about profits, or provide inaccurate information related to risks when participating in the service.
Some lenders also lend at very high interest rates, far exceeding the interest rate cap of 20 per cent per year legally allowed by the country.
“If a dispute arises due to the failure to claim loans, lenders may lose money as it makes it difficult to claim responsibility from P2P lending platform providers,” the SBV warned.
According to the SBV, lending also may cause socio-economic instability due to borrower defaults, causing long-term and heavy consequences that many countries around the world have experienced. China had to eliminate some 160 online lending companies as they were in fact high-tech criminals working to cheat investors.
The SBV said that it was carefully studying international models of P2P lending to develop a legal framework to effectively manage the country’s nascent fintech sector.
“A legal framework can bring out the positive aspects of this service, while preventing and minimising the risks and ensuring safety for individuals and enterprises, thereby enhancing financial inclusion in Viet Nam,” SBV’s deputy governor Nguyen Kim Anh said.