Interest rate of free market jumps to 30pct a month

The interest rate of black market currently jumps to 30 percent a month (10,000 dong on one million dong loan a day).

In urgent need of paying debts, a man living in Hanoi was charged 10,000 dong per one million dong of 20 million dong loan a day from a familiar lender. Two months ago, the interest was only equal to two third, even a half of current level.

According to a survey of VnExpress.net, in some outskirt districts such as Dan Phuong, Tu Liem…daily interest of loans at the free market is at least 3,000 dong per one million dong (against the previous 2,000 dong). The highest at the outskirt was also the same as that of districts inner city, which was 10,000 dong per one million dong if borrower does not have secured asset and the level will be 6,000 dong per one million dong if having secured asset.

Due to this movement, pawnshop owners also are becoming more cautious in providing loans to demanders in the free market with stricter lending requirements and higher interest rates.

Two weeks ago, a private corporate director was managing a 1 billion dong loan because his debts at a bank fell due. But with the offered interest of 4,000 dong per one million dong a day, he could not afford.

Nguyen Van Hung, vice director of SBV-Hanoi arm told VnExpress.net that the people who had free money and lent to take interest were also a kind of investors.

In fact, the interests on the black lending market are much higher than bank loan rates, but the market is still attracting some kinds of customers thanks to advantages in procedures and time which are more favourable than official lending market.

At banks currently, the consumer lending rate is common at 22-25 percent a year, production lending at 27 percent per annum with strict procedures, appraisal. – Vietbiz24

Tags: Vietnam banking industry, Vietnam finance, Vietnam financial, Vietnam interest rates