Usury rate on the online lending market place can be up to 1,400 percent per year

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Many loan ads are posted in residential areas. Illustration: H.Diu

According to Lieutenant Colonel Ngo Hong Vuong, there are four characteristics that identify usury, of which, the two most common are the "exorbitant" lending interest rate and the violent debt recovery behavior.

According to Article 468 of the Civil Code, the maximum interest rate ceiling is 20% (unless otherwise prescribed by law). Article 201 of the Penal Code stipulates that if the interest rate exceeds 5 times the highest interest rate of the civil code (understood as 100%/year), or the illegal profit is VND30 million or more, then the subject will be prosecuted for criminal liability of lending with heavy interest in civil transactions.

“However, the current interest rate in usury is often very high, sometimes up to 300-700%/year. Even some models of online lending are up to 1,400%/year, 700 times higher than the regulations,” said Lieutenant Colonel Ngo Hong Vuong.

Notably, online usury is showing signs of spreading. According to Lieutenant Colonel Ngo Hong Vuong, tricks of Vietnam's usury lenders are distributing, posting leaflets, setting up websites, using social networks, mobile phone applications, posting loan statements that need to meet, no mortgage, simple procedure with loan amounts from VND1 million to several tens of millions of VND.

The suspects also use technologyin the form of online lending and peer-to-peer (P2P) loans with very high interest rates.

The suspects also disguised the act of usury with contracts to circumvent the law and evade the investigation of the police, such as recording much lower interest rates in the contract or writing the interest rate as agreed in another document.

If the debtors do not pay their debts on time, the lenders often use many forms of debt collection such as threats, blackmail, destruction of property, injury, humiliation others, causing trouble at the debtor's place of business, although not to the point of criminal handling, but causing fear, confusion, economic damage, and discrediting the victim.

Especially, they also set up state-licensed debt collection companies, which are in fact criminal gangs hiding among companies and businesses, inviting officials who used to work in legal protection agencies (Police, Procuracy, Courts) to consult on their lending and debt collection activities.

At a recent conference, Deputy Governor of the State Bank Dao Minh Tu said to contribute to limiting usury, especially in rural areas, in addition to the banking industry actively providing credit, it is very necessary to have the synchronous participation of ministries, branches, local authorities and socio-political organizations to raise awareness about usury, to introduce institutions sufficiently deterrent to the subjects participating in usury.