In recent years, the form of peer-to-peer investment (P2P Lending) had grown strongly in Vietnam, thanks to the explosion of the 4.0 technology revolution. In addition to the group of individual customers with small loans for consumption purposes, peer-to-peer lending companies also targeted small businesses, family businesses, etc.
The mode of operation of peer lending companies was quite diverse. Some companies directly lent, some others acted as intermediaries to connect lenders (investors) and borrowers to form an exchange, including some names such as Vnvon owned by Vietnam Financial Connection JSC VFL, Fiin.vn of Fiin Financial Technology Innovation JSC.
Interest rates could be set by the lenders, or negotiated by lenders and borrowers, ranging from 16 percent to 20 percent per year. This form of investment had attracted the attention of many investors because of low investment capital, high interest rates, and other advantages.
As an investor, the Securities Investment Journal reporter contacted Vnvon employees and was invited with attractive introductions.
According to this employee, one person only needed to have 10 million dong to become an investor on Vnvon. The Company aimed at small and medium enterprises and business households, with a maximum loan of 1 billion dong for the first time. The employee introduced that the appraisal would be conducted before lending, depending on the business’s financial health that could lend at or below the maximum. For example, a business wanted to borrow 1 billion dong, and many investors participated. When mobilising enough money, the Company would disburse and would calculate interest from the date of registration with the highest interest rate at 18 percent per year.
More specifically, Vnvon staff said that businesses that wanted to borrow money would have to submit documents. Vnvon would look up on the system of Credit Information centre (CIC). If the enterprise belonged to group two debt, the Company would refuse to lend. The Company would conduct paper-based appraisals by tax reports and physical appraisals for consideration of business owners and facilities.
When the business was eligible, it must buy credit insurance so that the insurance would pay in case the business owner had an accident or died. Business owners must also use personal property to secure the loan. Completing the above procedure would allow the business to get a loan.
On the other side, investors could choose a self-selected or automatic portfolio, with terms of 10 days, 30 days, or 90 days, with interest rates depending on terms and maximum of 18 percent per year. However, a Vnvon employee informed that his side was directing investors to invest according to the selected item to be able to grasp the list of how long the loan business.
Regarding the fee, the employee said that the investor only had to pay the connection fee of five percent on the interest amount and the five percent personal income tax on interest. There were no account maintenance fees, and a minimum balance was also not necessary. However, on the profit table (sent by this employee, applied from March 1, 2020), there was still an account management fee and SMS fee of 22,000 dong per month.
For further verification, the reporter continued to play the role of a household with a loan demand of 300 million dong. At that time, the sales staff of Vnvon instructed the procedures to get funding, including financial statements, banking statements. Notably, the conditions for re-lending were elementary when confirming that this was a credit loan, and there was no need for collaterals.
Assessing peer-to-peer lending, in addition to advantages, many experts had also warned about the risks that the participants might face, such as counterfeit loan documents, difficulties in recovering debts, system errors, especially legal risks when this activity had no management sanctions.
Lawyer Vu Ngoc Chi (Director of Tam Anh Law Firm) said that lending at any stage or time was also double-sided. In many cases, borrowers and lenders needed to go through intermediaries to connect, support.
The nature was useful when the parties could understand each other’s abilities, be honest and mutually beneficial in a transaction.
Therefore, for all parties to benefit, in addition to beliefs and experiences, there was a need for knowledge, honesty, and ethics in business conduct, including borrowers and lenders.
