What is “black” credit?

1.How is “Creditblack usage” understood?

According to Clause 13, Article 3 of the Law on Credit Institutions 2010, there are 3 types of banking operations, including:

Receive deposit; granting credit; Providing payment services via accounts.

Clause 14, Article 3 of the Law on Credit Institutions 2010 stipulates that credit granting is an agreement for an organization or individual to use a sum of money or a commitment to allow the use of a sum of money on the principle of repayment by lending, discounting, financial leasing, factoring, bank guarantees and other credit granting operations.

However, currently, there is no legal document that specifically stipulates what is “black credit”. In fact, black credit can be understood as a form of credit lending with higher interest rates than prescribed by law from organizations and individuals that carry out money lending activities but are not registered for business, are not licensed by the state and do not comply with regulations on interest rates and loan conditions (also known as usury).

 2. What is the main reason why people borrow money related to black credit today? What is the form of debt collection related to black credit?

Reality shows that, because the demand for business loans in the current market is very “hot”, especially after the Covid 19 pandemic, businesses and people need capital for production, business and consumption. Meanwhile, lending and disbursement by banks and legal credit institutions are very strict. When borrowing capital, collateral must be available and the eligibility must be assessed to be eligible for the loan.

Therefore, it is difficult for businesses and people to access loans from banks if they do not have collateral or do not qualify for loans. Meanwhile, accessing capital from “black credit” in society is too easy and in the form of grant loans, the borrower only needs documents such as: Citizen ID, household registration book or some other identification documents such as student card, ATM card, diploma,… to be disbursed immediately.

– Main forms of debt collection related to black credit:

 In cases where the borrower is no longer able to pay, lenders hire people with criminal records to pressure the borrower to repay the debt, or confiscate the borrower’s assets…

Or the lender rents or sells the debt to a third party to collect the debt. Since then, many law consulting companies, financial lending companies, etc., with the trick of cooperating with a number of banking institutions and financial companies, carry out debt collection with huge remuneration (25% to 35% of the total amount collected) in the name of legal aid contracts. The employees of these companies are not legal experts but their main activity is debt collection. When the borrower is no longer able to repay the debt, in order to collect the loan money, companies hire debt collection staff from low to high levels: from calling debt reminders to calling to terrorize relatives and friends, using tricks: threatening, kidnapping relatives, carrying gas cylinders, coffins to homes, offices…

 3.According to the law, what is the legal lending interest rate?

Currently, lending organizations and individuals apply many different lending interest rates. Loan interest rates in civil transactions are prescribed in Article 468 of the 2015 Civil Code, specifically as follows:

Loan interest rate is agreed upon by the parties.

In case the parties have an agreement on interest rate, the agreed interest rate must not exceed 20%/year of the loan amount, unless other relevant laws stipulate otherwise.

In case the agreed interest rate exceeds the limit interest rate specified in this Clause, the excess interest rate will not be effective.

In case the parties have an agreement on interest payment, but the interest rate is not clearly determined and there is a dispute about the interest rate, the interest rate is determined at 50% of the interest rate limit specified above at the time of debt repayment.

At the same time, Article 91 of the Law on Credit Institutions 2010 also stipulates the lending interest rate as follows:

 Credit institutions have the right to set and must publicly post capital mobilization interest rates and service provision fees in the credit institution’s business activities.

Credit institutions and customers have the right to agree on interest rates and credit extension fees in the credit institution’s banking activities according to the provisions of law.

In case of unusual developments in banking activities, to ensure the safety of the credit institution system, the State Bank has the right to regulate the mechanism for determining fees and interest rates in the business activities of credit institutions.

Thus, in civil transactions, the highest interest rate is set at 20%/year. However, in the lending relationship between credit institutions and customers, the interest rates between the parties are agreed upon, except for the case according to Clause 1, Article 13 of Circular 39/2016/TT-NHNN dated December 30, 2016 regulating lending activities of credit institutions and foreign bank branches to customers, accordingly: Credit institutions and customers agree on lending interest rates according to market capital supply and demand, loan needs. and customer credit level, except in cases where the State Bank of Vietnam has regulations on maximum lending interest rates in Clause 2, Article 13 of Circular 39/2016/TT-NHNN.

 4. PWhat are the methods and tricks of criminals related to black credit?

Common methods and tricks of criminals related to black credit are as follows:

– Taking advantage of the economic situation of a group of people facing many difficulties who need capital for production, business or consumption, scammers understand this psychology and use tricks. Impersonate real banks and financial companies in Vietnam, create websites, applications, and run ads through social networking platforms to solicit unsecured loans.

– Distribute and post leaflets at public locations, electricity poles, fences, places where many people pass by or create thousands of Facebook accounts with fake information sources, participate in groups and forums, post advertisements for unsecured loans with low interest rates (only 1%/month), simple loan procedures, no need to meet in person; Bad debt can still be borrowed; No mortgage, no appraisal, just need ID card or Citizen ID card and have a bank account/ATM card to be able to borrow money… Some other lenders operate through acquaintances, introductions…

– When a borrower approaches, the subjects will lure and ask the borrower to provide personal information, such as: full name, phone number, photo of ID card/CCCD, portrait photo… to serve loan application. After convincing the borrower to transfer money to support loan verification and approval, the subjects continued to cite a series of reasons why the loan was not disbursed due to the borrower’s application filing errors. From there, they require borrowers to pay additional amounts to secure the loan or fix system errors; promises to refund the amount sent to the customer after the loan is disbursed. However, when the borrower transfers money to the account number of the providing subjects, the subjects will immediately appropriate it and cut off contact.

– In fact, to ensure recovery of capital and interest when loaned, black credit lenders often require borrowers to make a “fake” contract to transfer land use rights, housing or vehicles to the lender in order to borrow capital. Borrowers who need to borrow large amounts of money in a short time for use and accept to pay very high interest rates until unable to pay will be forced to transfer ownership of the mortgaged assets to the lenders. The form of loan collection agreed upon by both parties can be collected daily, weekly and monthly…

 5. How should people who commit loan sharking be handled?

– About administrative handling: According to Point d, Clause 4, Article 12 of Decree 144/2021/ND-CP of the Government stipulating sanctions for administrative violations in the field of security, order and social safety; prevent and combat social evils; fire prevention and fighting; Prevention and control of domestic violence (Decree 144/2021ND-CP): The act of operating a pawnshop service that lends money with assets pledged but the loan interest rate exceeds the interest rate prescribed by the 2015 Civil Code is subject to a fine of 10-20 million VND.

– About criminal handling: According to the provisions of Article 201 of the 2015 Penal Code (amended and supplemented in 2017), people who commit the crime of loan sharking are criminally handled as follows:

+ Lending in civil transactions with an interest rate 05 times or more of the highest interest rate specified in the Civil Code, gaining illegal profits from 30,000,000 VND to under 100,000,000 VND or having been administratively sanctioned for this act or convicted of this crime, not yet having his criminal record erased but continuing to violate, shall be fined from 50,000,000 VND to 50,000,000 VND to 200,000,000 VND or non-custodial reform for up to 03 years.

+ Committing a crime and gaining illegal profits of 100,000,000 VND or more, shall be fined from 200,000,000 VND to 1,000,000,000 VND or imprisoned from 06 months to 03 years.

+ The offender may also be fined from 30,000,000 VND to 100,000,000 VND, banned from holding any position, practicing certain occupations or doing certain jobs from 01 year to 05 years.

Thus, depending on each specific case, the act of lending at high interest rates will be administratively sanctioned according to Point d, Clause 4, Article 12 of the Decree. 144/2021/ND-CP or be prosecuted for criminal liability according to Article 201 of the 2015 Penal Code.