Legal News
SBV working on framework for P2P lending

03 - 10 - 2018
VNS

The State Bank of Viet Nam is carefully studying international models of peer-to-peer lending (P2P) to develop a legal framework to effectively manage the country’s nascent fintech business, according to SBV deputy governor Nguyen Kim Anh.

Anh spoke at a recent workshop on international experiences in P2P lending held in Ha Noi with the participation of more than 100 representatives, including financial management authorities from China, Singapore, Thailand and Indonesia.

With the rapid proliferation of mobile devices, artificial intelligence and big data, P2P lending—the practice of lending money to individuals or businesses through online services that match lenders with borrowers—has developed rapidly around the world in recent years.

Addressing the workshop, Eric Sigwick, the Asian Development Bank (ADB) Country Director in Viet Nam, said that P2P lending experienced a period of fast growth and development starting in 2005. The emergence of Fintech and P2P lending was inevitable globally and Viet Nam will not be excluded.

Although P2P can create enormous socio-economic benefits, it also contains potential risks for the relevant parties, he said, adding that it is necessary to strictly monitor this field to mitigate the risks and improve awareness of the relevant parties.

Through this model, lenders can earn higher returns than they can get from banks while borrowers, especially individuals and micro businesses, can get money at lower rates. But the lending is also fertile ground for high-tech crimes. China had to eliminate some 160 online lending companies as they were in fact high-tech criminals working to cheat investors.

According to Anh, as part of the role of the State management authority in the monetary and financial field, the SBV has full awareness of the benefits and potential risks of P2P lending.

Therefore, Anh said, the SBV has been studying and assessing the positive and negative sides, risks and other relevant issues of P2P lending.

“Currently, the SBV’s functional departments are putting in a lot of effort to study the models of P2P lending in the world, the management experience and the operational supervision in other countries in order to formulate a legal framework which can bring out the positive aspects of this service product, while preventing and minimising the risks and the negative effects and ensuring safety for individuals and enterprises, thereby enhancing financial inclusion in Vietnam,” Anh said.

According to ADB expert Duong Nguyen, the global P2P market is estimated to surge by up to 53 per cent per year to reach some US$490 billion in 2020. In China alone, P2P outstanding loans reached nearly 1.3 trillion renminbi in the 2014-17 period.

In Viet Nam, P2P lending has also become a billion dollar industry. The development of the P2P lending platforms in the country is shown via impressive figures of total outstanding loans, the size of the connection, the quality of repayments and the number of companies trading on P2P platforms. For example, Tima, a P2P lending company in Viet Nam, has more than two million registrars, three million loan applications, and nearly VND44 trillion ($1.87 billion) of loans disbursed from more than 23,700 investors.

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