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Vietnamese man not charged $352,000 in highly controversial credit card debt case
A customer of the Vietnam Export Import Commercial Joint Stock Bank (Eximbank), whose credit card debt rocketed to VND8.8 billion (US$352,480) from about VND8.5 million ($340) in 11 years, which has drawn public attention recently, will have the debt revised to a more reasonable figure, said an Eximbank executive.
Eximbank deputy general director Nguyen Ho Hoang Vu addresses a press briefing in Ho Chi Minh City, March 21, 2024. Photo: Chau Tuan / Tuoi Tre
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The lender will not collect VND8.8 billion from the cardholder, P.H.A., and already met with him to reach a win-win solution to the issue, Eximbank deputy general director Nguyen Ho Hoang Vu told a press briefing on Thursday last week.
However, the exact amount of interest and fees after their negotiation was not revealed.
Vu elaborated that Eximbank issued its policies on credit card interest and fees based on market practices and similar products available in Vietnam.
To address the overdue credit card debt in question, bank staff had to assess the cardholder's total debt and obtain approval from their supervisor for the appropriate interest rates and fees before informing the customer of his outstanding balance.
However, the bank staff might have adopted an inflexible formula when calculating the credit card interest and fees for P.H.A., Vu said.
Speaking at the press briefing, Vo Minh Tuan, director of the State Bank of Vietnam (SBV) branch in Ho Chi Minh City, said that after being informed of the case, the central bank asked Eximbank to verify it, work with the cardholder to safeguard the rights and interests of the lender and the customer, as well as report the outcome of the assigned tasks to the SBV.
The SBV official said that everyone may think that the mentioned interest amount is absolutely astounding.
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| Vo Minh Tuan, director of the State Bank of Vietnam branch in Ho Chi Minh City, speaks at a press briefing in the city, March 21, 2024. Photo: Chau Tuan / Tuoi Tre |
Several credit card issuers, including Eximbank, use a compound interest formula to work out how much money the cardholder will owe, Tuan explained.
According to the SBV, lenders in Vietnam are currently allowed to negotiate interest rates with borrowers, without administrative interference from the central bank, except for several priority fields.
When applying the compound formula to calculate credit card interest, lenders should ensure the rights and interests of their customers, the SBV official suggested.
To prevent a similar occurrence in the future, the SBV's Ho Chi Minh City branch will request credit institutions across the city to compile a list of customers who have left their credit cards unused for an extended period.
They will then collaborate with these customers to address any accrued interest and fees.
In mid-March, P.H.A, hailing from northern Quang Ninh Province, was notified by Eximbank that he owed a credit card debt of VND8.8 billion.
The lender said that A. opened a Mastercard with a VND10 million ($400) limit at an Eximbank branch in Quang Ninh on March 23, 2013 and later used the card to conduct two transactions worth VND8.5 million ($340) in total on April 23 and July 26 the same year.
The amount was converted to bad debt on September 14, 2013, the lender said, adding it had informed and worked with the customer many times over the past 11 years but had yet to receive any payments from him.
Details of the case then went viral on social media platforms, provoking public controversy.
Tuoi Tre News
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