Govt greenlights two-year test period for peer-to-peer lending platforms
Revised Article:
The Peer-to-Peer (P2P) lending scene in modern-day Việt Nam is gearing up for a two-year trial, starting July 1, following the Government's Decree 94, issued on April 29. This brings P2P lending, credit scoring, and data sharing via open APIs to the table, creating a buzz in the fintech industry.
Ha Noi – Việt Nam will soon be the testing ground for a host of fintech activities in the banking sector. Among these innovations, P2P lending is the one that intrigues the most. This model cuts out traditional financial institutions by connecting borrowers and lenders directly through online platforms—bypassing banks while fostering innovation and transparency.
Only P2P lending companies licensed by the State Bank of Việt Nam (SBV) will be given the green light during the trial period. Foreign banks are excluded from this round of experimentation. Credit institutions and fintech firms may join the fun, but the trial doesn't ensure a smooth sail for future compliance once definite laws are in place.
As of now, around 100 P2P lending companies dominate Việt Nam's financial landscape, some with foreign investments. The SBV is, however, concerned about the transparency and oversight of existing agreements due to a lack of loan management mechanisms and potential disputes.
Beyond the lending sphere, Việt Nam's fintech landscape boasts approximately 200 companies that offer services like digital payments, credit scoring, and financial applications, primarily catering to the banking sector. Decree 94 also welcomes the testing phase for these technologies, emphasizing credit scoring systems and data sharing through open APIs.
The Government's aim is twofold: foster innovation and promote financial inclusivity by providing low-cost, efficient financial services to individuals and businesses, all while balancing risk management and ensuring consumer protection in the burgeoning fintech market.
However, the watchdog has raised flags about unscrupulous P2P lending firms that deceive consumers. Some companies pose as P2P intermediaries and utilize misleading advertisements promoting high profits, high interest rates, and easy lending terms, only to cheat people and misappropriate funds. Others offer seemingly low interest rates and lenient lending conditions but apply exorbitant actual interest rates behind the scenes.
The P2P lending industry, though nascent in Việt Nam, is crucial to the country's aspirations of becoming an international financial hub—one that rides on AI-driven fintech to redefine its banking sector. However, unresolved issues like dispute resolution mechanisms and cross-border regulatory alignment remain critical hurdles. Furthermore, sandbox models require clear legal frameworks to minimize risks and ensure scalability, while contending with the novelty of P2P models in Việt Nam. Additionally, institutions must navigate overlapping regulations like anti-money laundering rules and consumer protection laws while piloting new lending models. Stricter data privacy measures, as outlined in the upcoming Personal Data Protection Law, will also directly impact P2P platforms (currently under review).
The P2P lending activity that has emerged in Việt Nam in recent years. Photo thoibaonganhang.vn
- The government's Decree 94 has set a two-year trial period for P2P lending in Việt Nam, starting July 1, opening opportunities for P2P lending, credit scoring, and data sharing via open APIs.
- Among the numerous fintech activities in the banking sector in Ha Noi, P2P lending is the most intriguing, as it bypasses traditional financial institutions, connecting borrowers and lenders directly through online platforms.
- Only P2P lending companies licensed by the State Bank of Việt Nam (SBV) will be allowed during the trial period, with foreign banks excluded from this round of experimentation.
- Credit institutions and fintech firms may join the trial, but future compliance with definite laws is not guaranteed once they are in place.
- Beyond lending, Việt Nam's fintech landscape comprises around 200 companies offering services like digital payments, credit scoring, and financial applications, primarily catering to the banking sector—with Decree 94 also including the testing phase for these technologies.
- The government's aim is to foster innovation and promote financial inclusivity while balancing risk management and ensuring consumer protection in the burgeoning fintech market, but concerns regarding unscrupulous P2P lending firms and unresolved issues like dispute resolution mechanisms remain critical.
- The P2P lending industry in Việt Nam, with its potential to ride on AI-driven fintech and redefine the banking sector, faces critical hurdles such as cross-border regulatory alignment, clear legal frameworks, contending with overlapping regulations, and stricter data privacy measures.
