Keeping credit safe in expanding unsecured lending

Strong capital demand, open market

The State’s policy under Resolution 68 encourages the simplification of procedures, the acceleration of disbursement and the facilitation of access to capital, especially for unsecured loans. This is an opportunity for unsecured credit to become a quick and convenient “capital channel”.

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Resolution 68 paves the way for unsecured credit to become a quick and convenient capital channel.

The market is wide open but comes with competitive pressure and bad debt risks. Banks are forced to apply modern technology, manage data closely and optimize products to survive. Big Data and in-depth data analysis are the keys to sustainable development of unsecured credit.

Mr. Le Van Thanh, Deputy General Director of Vikki Digital Bank

Do not loosen standards, strengthen appraisal

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Credit expansion must be accompanied by rigorous due diligence and multi-layered risk management.

According to Mr. Chau Dinh Linh, Lecturer at Ho Chi Minh City Banking University, expanding credit does not mean lowering standards:

“We do not loosen the appraisal criteria but tighten them, with multiple layers of risk management. Technology helps banks make clear and transparent qualitative and quantitative assessments. When we understand more deeply about customers’ financial activities, credit quality will increase, thereby allowing unsecured credit to expand as in many developed countries.”

Giữ an toàn tín dụng trong mở rộng cho vay tín chấp - Ảnh 7. — *Mr. Chau Dinh Linh - Lecturer at Banking University of Ho Chi Minh City shared*

Keep bad debt within safe threshold

An important principle is to maintain the bad debt ratio below 3%, the level recommended by the State Bank to ensure system safety.

The risk of bad debt may increase, but with a strong capital buffer and a high bad debt coverage ratio, banks can completely prevent it. This is the way to maintain market confidence and stability for the financial system.

Mr. Nguyen The Minh, Expert of Yuanta Vietnam Securities Company

Giữ an toàn tín dụng trong mở rộng cho vay tín chấp - Ảnh 8. — *Maintaining bad debt below 3% is the principle of ensuring the safety of the banking system.*

Mr. Chau Dinh Linh also emphasized that to ensure long-term safety, banks need to increase equity, comply with capital adequacy ratios and counter-cyclical capital buffer roadmaps.

Need to improve community financial literacy

Along with technical solutions, many experts believe that community financial education is an indispensable foundation. Borrowers need to understand that the right to borrow always comes with the obligation to repay on time.

Giữ an toàn tín dụng trong mở rộng cho vay tín chấp - Ảnh 9. — *Community financial education helps make credit a healthy driver for sustainable growth.*

Only when this awareness spreads widely, will credit truly become a healthy driving force, both supporting consumption and promoting sustainable growth for the economy .

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