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“Black credit” attracting borrowers
Many small businesses and individuals are unable to access bank loans at the moment, especially when the lending interest rates are sky high and the requirements set by banks on borrowers are very strict. In this case, black credit is an alternative solution for them.
Wanting a small sum of capital to do business, Duy Anh in My Dinh new urban area in Hanoi dares to come to a pawnshop to ask for capital. By mortgaging a motorbike worth 35 million dong, Anh could borrow 25 million dong with an interest rate of 5000 dong per every one million dong borrowed. However, in order to borrow the sum of money, Anh had to write a document, stating that he has sold the motorbike to the pawnshop, and another document saying that he is borrowing the same motorbike for one month. He also had to show the copy of the identity card and ho khau (Permanent residence book) which proves that he is a permanent resident in Hanoi.
Anh said that he has to seek capital from “black credit sources”, though he really does not want to. The lending interest rates on the black market are always exorbitant. Meanwhile, in such a deal, lenders always “play safe”, while borrowers have to bear all the risks. “The lender anticipated that I cannot pay debts, therefore, he forced me to write a document on selling motorbike and borrowing motorbike. In case I cannot pay debts, he will distrain the motorbike,” Anh said.
In Hanoi, the black credit remains a capital channel that has existed alongside with the official capital channel.
Huong in Ha Dong district in Hanoi, who is a big lender in the black credit market revealed that the current popular lending interest rates are 3-4 percent per month. This means that on average, borrowers have to pay 3000-20,000 dong per day for every one million dong he or she borrows.
According to Huong, whether the interest rates are high or low would depend on many factors. However the two most important factors are the relationship with the lenders and the value of mortgaged assets.
Huong said she is lending to acquaintances at the interest rate of 3000-4000 dong per day for every one million dong and she does not required mortgaged assets. However, in dealing with strangers, Huong always charges higher interest rates and asks for mortgaged assets.
Especially, the lending sums of money are never higher than the value of mortgaged assets. For example, if a borrower has an item valued at 10 million dong, he would be able to borrow 7-8 million dong at maximum.
Tuan, the owner of a pawnshop on Lang Road in Hanoi, said that nowadays pawnshops not only act as secured creditors, but also provide loans. While admitting that the lending interest rates are sky high in the black credit market, Tuan said that the profits should be high to cover expenses and risks.
Tuan related that some days before Tet, a young boy came and asked for a very high sum of money, nearly 100 million dong. Though the young man showed the documents of the asset to be mortgaged, Tuan did not dare lend the boy money. He admitted that he did not have enough knowledge to verify the reliability of the documents.
The simple procedures set by lenders in the black credit market are the most attractive factors for borrowers. However, in return, people have to borrow money at exorbitant interest rates.
The black credit market still can exist and develop because the demand for capital remains very high. In late January, banks asked 22-24 percent per annum for consumer loans. The interest rates have dropped to 20 percent, but the interest rates are still overly high for many people.
Besides, it is difficult for many people to borrow money from banks because they cannot meet the strict requirements set by banks. Meanwhile, if they borrow money on the black market, the procedures prove to be very simple and the disbursement rate is very quick.
vietnamnet
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