Banking authority imposes borrowing restrictions on peer-to-peer lending operations
The State Bank of Vietnam has announced new regulations for Peer-to-Peer (P2P) lending companies as part of a pilot program, effective from July 1. These regulations aim to foster innovation and financial inclusion in the Vietnamese banking sector, while maintaining risk control.
Under the new rules, P2P lending companies are required to connect, report, and check credit information at the National Credit Information Centre (CIC). This participation in the national credit information system will help manage customer debt and provide P2P lending companies with more information about borrowers, thereby improving loan quality.
P2P lending is a form of direct connection between lenders and borrowers through an online platform, bypassing traditional financial intermediaries like banks. As of the current date, approximately 100 companies are operating in the P2P lending sector in Vietnam, with many being foreign-invested companies.
Individual customers can borrow up to VNĐ100 million from a single P2P lending company and up to VNĐ400 million in total from all P2P lending companies. These loan limits aim to ensure a common consensus on risk management principles and to restrict financial losses for both lenders and borrowers.
The pilot program for P2P lending will also include credit scoring and data sharing via open application programming interfaces. This is intended to promote transparency and efficiency in the P2P lending sector.
In early May, the Government issued Decree 94 on a controlled testing mechanism (sandbox) and financial technology (fintech) solutions in the banking sector. The State Bank of Vietnam is ready to support fintech organizations in promoting innovation and financial inclusion, while maintaining risk control.
It is important to note that these regulations do not apply to foreign banks. As of the current date, no specific fintech organizations have been named in publicly available sources as participants in the pilot program for P2P lending and credit information reporting and verification on the National Credit Information Centre website in Vietnam.
The National Credit Information Centre, operated by the State Bank of Vietnam, is a website that provides a platform for credit information sharing and management. The use of this system by P2P lending companies is expected to contribute to the stability of the financial system.
The licenses for P2P lending testing activities will be issued for a duration of two years. The State Bank of Vietnam remains committed to supporting the growth and development of the P2P lending sector in Vietnam, while ensuring a safe and secure environment for all participants.
