Private firms encouraged to join credit information market

The draft decree replacing Decree 10/2010/ND-CP was opened for public comments by the State Bank of Viet Nam (SBV).

Viet Nam’s market for credit information is considered underdeveloped and lacks competition.

To date, only two companies are eligible to provide credit information in Viet Nam, including the Credit Information Centre (CIC) under the management of the central bank and Vietnam Credit Information Joint Stock Company (PCB) – a joint venture founded by 11 local banks.

Demand for credit information is increasing, along with expansion of the financial market and the digital economy.

A total 42 banks, 27 finance and financial leasing companies, 51 branches of foreign banks and about 1,200 people’s credit funds are operating and need credit information for service expansion.

In recent years, consumer lending has been developing rapidly along with various types of loans, including asset leasing transactions, installment and deferred payment.

In addition, the debt trading market is developing to support the restructuring and handling of bad debts, which also requires reliable information.

Getting private firms involved is expected to help diversify sources of information, reduce service costs and increase transparency in the market.

According to the draft , some organisations, which are not credit institutions or foreign banks’ branches, also have credit information of borrowers and want to provide or use this information. To meet this demand, the draft would relax conditions for establishing credit information firms and entities allowed to receive credit information.

The draft proposes relaxing the restriction that a credit information company must have at least 20 commercial banks committed to providing it exclusive information.

Currently, 20 of Viet Nam’s 42 banks have not committed to provide information, while the rest give theirs to the PCB.

The SBV hopes to have at least two more credit information companies in the coming years.

According to Doan Thai Son, deputy governor of SBV, to ensure customers’ interests and enhance the information access, the draft has supplemented several conditions for establishment and management of the credit information companies.

Per the draft, the minimum charter capital of a credit information company would be doubled from VND30 billion (US$1.3 million) to VND60 billion. The quality of the company’s management board will also be improved.

The draft also enhances the regulations on information security, saying that borrowers have to agree for their information to be collected and passed on to credit information providers.

Son said all of these rules would be in harmony with other laws including the Law on Credit Institutions, Civil Code Law, Enterprise Law and Consumer Protection Law.