A P2P lending app on a smartphone. The absence of a legal framework for the financial service has stymied Fintech companies for years. (Photo baochinhphu.vn)The absence of a legal framework for P2P lending has always been big troublefor Fintech companies. It has led to a serious misconception among manyborrowers that the financial service is merely predatory lending.
And that is exactly the reason why the P2P lending market has been slow overthe years. Scores of Fintech companies have had to cut their workforce by halfon cause of slumps in sales and struggled to navigate the law's grey area.
Some others, such as VO247 and Finn Credit, have had to cease their operationsowing to a dwindling customer base.
A manager of a Fintech company, who asked not to be named, said its sales haddropped by half compared to last year whereas its non-performing loans wererising steadily.
"We are on the verge of leaving the market. We see noprospect for growth," said the manager.
But they will suffer the legal uncertainty no more.
Pham Anh Tuan, Director of the Payment Department at the StateBank of Vietnam (SBV), said SVB would draw up a decree on regulatory sandboxfor Fintech and submit it to the Government for approval no later than Augustto fill the legal gap.
"We are working to hand the decree in within August. If the Governmentapproves it in Q3/2023, we will issue follow-up legal documents in early2024," said Tuấn.
He also said the decree would be good news to both Fintechcompanies and borrowers as it paves the way for a regulated playing field forboth.
Truongng Thanh Duc, director of the law firm ANVI, viewed consumer financing asa driving force behind economic growth and a regulatory sandbox for it could bea starting point for a fully-fledged legal framework in the future.
"We cannot neither regulate Fintech companies as we did to banks or leavethem unregulated. That's why we need a regulatory sandbox to testregulations," said Duc.
The lawyer also called for the introduction of standard procedure for onlinelenders to follow when recovering their loans. Such procedure would preventthem from taking illegal measures to get their loans serviced.
Nguyen Quoc Hung, secretary-general of the Vietnam BanksAssociation, highly appreciated the introduction of the decree.
He said his association had sent appeals to SVB, calling for alegal framework for consumer financing, and now the appeals had been wellheard./.
VNA
