Banks asked not to force borrowers to buy insurance

By Quynh Trang   November 28, 2022 | 04:51 pm PT
Banks asked not to force borrowers to buy insurance
An employee holds stacks of cash at a bank in Vietnam. Photo by VnExpress/Anh Quan
The State Bank of Vietnam - HCMC Branch has asked commercial banks to punish staff who pressurize borrowers into buying insurance policies.

According to several business associations in HCMC, some banks have made it a condition that firms’ buy insurance policies through the banks (bancassurance) if they are to get loans, increasing their financial burden.

Individual borrowers have also reported that they are being forced to use bancassurance services when they request fresh bank loans or renewal of expired ones.

A woman told VnExpress that she was requested by the staff of a private bank in the city to buy a life insurance policy of VND60 million ($2,400), equivalent to 4% of the loan she’d asked for.

"I do not need a life insurance policy, but if I do not spend that big sum of money on buying it, I am afraid that the bank will deny the loan," she said.

There are reports that many bank employees are taking advantage of the situation of tightened credit to force customers to use bancassurance services.

Many commercial banks have reached or nearly reached the credit growth cap set by the central bank.

Vietnam has set a 14% credit growth cap for this year. However, the country will consider lifting the cap, Prime Minister Pham Minh Chinh said mid-November, as the economy faced the pressures from higher interest rates and tightened credit conditions.

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