This new regulation is expected to attract customers who need to borrow small amounts of money, instead of going to financial companies or black credit, because banks no longer require customers to have full and complicated documents as before. However, in reality, borrowing consumer loans at banks is not easy.

Simpler but not easy

After hearing about the new regulations related to consumer loan procedures, Mr. Tuan (Go Vap District, Ho Chi Minh City), with an income of about 10 million VND/month, said he would learn about the procedures to borrow about 100 million VND to renovate his house.

"I have intended to renovate my parents' house in the countryside, but I have only saved more than 50 million VND. If the procedures are favorable, I will borrow another 100 million VND to have enough money to renovate the house," said Mr. Tuan.

Ms. Tuyet Anh (District 12, Ho Chi Minh City) was also very excited when she said that she really wanted to change her motorbike, buy a fancy refrigerator or buy a massage chair... but for a long time she was hesitant because she was afraid to borrow from a finance company while the bank procedures were complicated.

"My husband and I have some money left over, but I only dare to buy one thing at a time, until I save enough before I dare to buy another. If the bank procedures were simpler, I would boldly borrow money," said Ms. Tuyet Anh.

However, some customers have tried to find out and said that getting a loan from a bank is not entirely easy. Needing 80 million VND to complete the apartment renovation, Mr. TTQ (Tay Mo, Hanoi) said that he had just researched the procedures at two banks to borrow this amount of money for one year but found it very "sour".

According to Mr. Q., although with the new regulation, customers do not have to prove the feasibility of the loan plan, borrowers still have to prove their ability to repay the debt and their place of work, place of residence..., some banks even require customers to provide information of the co-borrower.

"The bank requires me to provide a statement of my last six months' salary along with my labor contract or the latest salary increase decision. In addition, I also have to provide a photocopy of my citizen ID, marriage certificate and the co-debtor, my wife, including: full name, date of birth, citizen ID, place of work...", Mr. TTQ said and was concerned that the loan interest rate is still 10.5%/year, not cheap.

Ms. VMN (Hai Ba Trung District, Hanoi), who just borrowed 50 million VND to buy a motorbike for her child to go to work, said that in order to provide her citizen identification card, salary statement... as required by the bank, she had to open a salary account at that bank. Every month, the bank will automatically deduct the principal and interest of the loan.

"The bank also asked the car dealer about my car purchase. After I received the car, the bank disbursed the money to the dealer. That way, the bank was strict. It was also convenient and easy for the borrower," said Ms. VMN.

Still have to prove debt repayment plan

Mr. Dao Minh Tu, Deputy Governor of the State Bank of Vietnam, said that the issuance of Circular 12, which stipulates that loans under VND100 million do not require a feasible business plan, is aimed at creating conditions for small borrowers. "The goal is to make it more convenient for borrowers, removing conditions previously considered too strict to promote consumer finance," Mr. Tu said.

According to Mr. Tu, consumer credit activities in Vietnam have grown strongly in both scale and product diversity in recent years. To date, the total outstanding loans for living and consumption in Vietnam have reached VND2.9 million billion, equivalent to 20% of the total outstanding loans of the economy.

"Reducing regulations in the loan approval process does not mean that it makes the loan approval process looser, but rather to suit practical requirements as well as help promote consumer finance in the future," Mr. Tu emphasized.

According to Mr. Le Hoang Tung - Deputy General Director of Vietcombank, this bank has issued an internal document implementing this regulation, in which customers do not need to prove that they have a feasible capital usage plan for loans under 100 million VND, only need minimal information about the legal purpose of capital usage and financial capacity.

"This policy is the basis for us to develop consumer credit products on digital channels," said Mr. Tung.

However, speaking with Tuoi Tre, the general director of a joint stock bank in Ho Chi Minh City said that the fact that customers do not have to prove a feasible loan plan does not mean that they do not have to prove a loan repayment plan, because the bank's unchangeable principle has always been that lending must ensure the ability to recover debt.

"Based on the information provided by customers and using many other tools, the bank will have to assess whether the customer has the ability to repay the debt or not. However, the procedure will be much simpler than for large loans and some banks have developed lending applications to promote this lending segment," he informed.

Answering the question of whether banks are competing with financial companies to attract small retail customers who are reluctant to go to banks, this person said that although they both provide smaller loans, banks and financial companies have their own target customers and the banks' criteria will be higher.