The State Bank of Vietnam (SBV) has sent a notice to all domestic credit institutions and branches of foreign banks in Vietnam to be cautious in partnering with P2P lenders. Measures are needed to ensure consumers are protected in a sector that has not yet been regulated, the bank said.
In the official notice, SBV Deputy Governor Nguyen Kim Anh said that while P2P lending could increase access to financial resources—especially for the unbanked population—it did come with potent risks.
According to the bank, some local P2P lending companies have misled investors and consumers into assuming that P2P activities are protected under current regulations and insured against risks.
P2P lenders in Vietnam are often registered as investment consultancy firms, allowing them to avoid being subjected to stricter financial regulations. This has given rise to lending models in Vietnam that have been exploited to serve fraudulent activities in areas such as “black credit” or “loan sharking,” the SBV noted.
The warning from Vietnam’s central bank comes at a time when P2P lending has become Vietnam’s second-largest fintech segment only behind e-payments. The country’s fintech sector has been booming, with about 120 companies looking to capitalize on the country’s growing middle class and Internet penetration.
Long-term measures to regulate the sector are in the making, specifically a potential pilot program for P2P lending.
Other countries in the region like Indonesia and Malaysia have already formulated rules for the sector, although even with those in place, it’s an ongoing battle to reign in unethical lending platforms.