HCMC proposes to outlaw debt collection business

By Hung Le   September 4, 2019 | 07:57 pm GMT+7
HCMC proposes to outlaw debt collection business
A note of a loan-sharking ring near an industrial park in Hanoi that offer loans for workers. Photo by VnExpress/Pham Du.

Debt collection should be banned because these businesses are fomenting public disorder and liaising with criminal outfits, HCMC authorities say.

A report recently submitted by the HCMC People’s Committee to the Ministry of Finance noted that debts are civil or contractual relationships, thus disputes should be resolved through negotiation or legal action, and decisions enforced by the judgement issuing body or bailiffs.  

Legalizing debt collection services has inadvertently created a loophole for some businesses to collude with criminals and local gangs, jeopardizing public order and security, it said.

Many criminals are hiding behind the façade of legitimate lending or debt collection services to carry out loansharking activities and generating dishonest profits. If debtors fail to pay on time, these businesses often employ people with criminal records to intimidate, inflict economic loss or defame victims and their families.

Demand for these loan sharks follows people who take quick loans without assets to put up for collateral, or those who require money for illegal activities such as gambling or drug abuse, the report added.  

Senior Lieutenant Colonel Nguyen Dang Nam, head of HCMC’s Criminal Police Department, said the city has 67 debt collection companies.

There are strict regulations on qualifications and ethical behaviour for personnel in this business, but most registered debt collection companies in Vietnam have committed violations since going into operation, showing signs of colluding with gangs, or organizing crowds in front of businesses or private homes of debtors, Nam told local media.

"Most of these companies mainly target relatives of debtors. Usually, the debtors themselves would have fled," he added.

However, some experts are worried that outlawing debt collection would leave lenders with less protection.

"Debt collection does not need to be prohibited, but a legal framework needs to be established for lender-borrower relationships. For instance, it should specify protection mechanisms that can be used when the debtor fails to deliver on his obligations," economist Vu Dinh Anh told local media.

Other experts suggested that if the government were to ban debt collection, it needs to carefully consider the impacts, and issue a roadmap for licensed enterprises to gradually stop operating and switch to other businesses.

Incomplete statistics from the Ministry of Public Security reveal that more than 7,600 loan-related crimes have been recorded in Vietnam in the last four years, with both lenders and borrowers affected.

They include 56 murders besides intentionally inflicting injuries, robberies, seizing assets using force, frauds, and scams.

Loan-sharking often involves debt collection by rogue enforcers and thugs. The criminal police department is currently monitoring 124 gangs with 831 individuals engaged in crimes related to loan-sharking.

 
 
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