Credit limit to double for the poor

Monday, Feb 25, 2019 16:18

Agribank will apply a consumer lending package of about VND5 trillion with quick procedures and documents for poor borrowers. — Photo Agribank

The Government will double the credit limit for poor people seeking loans without collateral, as part of efforts to reduce poverty and prevent loan sharks.

Under a new decision, which will take effect from March 1 this year, poor households will be allowed to borrow a maximum of VND100 million (US$4,300) instead of VND50 million as before, for up to 120 months from the Vietnam Bank for Social Policies (VBSP) and the Bank for Agriculture and Rural Development (Agribank).

Besides poverty reduction, the new policy on increasing the limits of unsecured loans given by banks to the poor is also aimed to prevent those people from approaching loan sharks with exorbitant interest rates. The number of loan sharks preying on vulnerable people has increased sharply recently and caused adverse impacts on society.

According to the State Bank of Viet Nam (SBV)’s Banking Supervision Agency, loan sharks often target people with unstable incomes, who live in remote areas and need money for healthcare and food. Banks should therefore expand their formal credit to remote areas, helping prevent and repel loan sharks.

In order to prevent loan sharks, SBV Deputy Governor Dao Minh Tu recently asked Agribank to research and apply a consumer lending package of about VND5 trillion with quick procedures and documents.

The VBSP should also supplement consumer lending programmes to facilitate the lives of poor households, Tu instructed.

According to Tu, it is possible to request such loans and disbursement within one day, meeting the urgent and legitimate needs of borrowers. The goal of this flexible policy is to financially support low-income people and farmers in remote areas so that they don’t look for illegal money lending. — VNS

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