Context: Consumer finance companies are the formal credit channel for customers traditional banks do not serve, but also where abusive debt-collection practices and bundled insurance sales once eroded trust in this very lawful credit channel.
The Legal Framework That Decides the Issue
A consumer finance company is a non-bank credit institution under the Law on Credit Institutions 32/2024/QH15, permitted to lend for consumption (including instalment loans and lending via cards and apps) but not to take personal deposits like a bank or provide payment services through customer accounts. The tightening focuses on three practices that drew major complaints: transparency of interest and fees (every loan cost must be notified in advance and shown in the contract, ending the low-interest, high-fee model), debt-reminder and collection practices (limits on contact frequency, bans on threats, insults and pressuring unrelated relatives), and insurance sold with loans (insurance may not become an implicit condition of credit granting).
Establishing a finance company belongs to the State Bank’s strict licensing group: minimum charter capital at the high level prescribed for non-bank credit institutions, founding shareholders must prove financial capacity and not be prohibited persons, with a qualified executive team. Because of this licensing barrier, the finance-company M&A market is active on the logic of buying an existing licence and network: foreign investors buy shares in existing finance companies within applicable ownership limits rather than licensing from zero. What the buyer diligences hardest is not the current loan book but the past compliance file — a company with a heavily complained collection history carries unexposed inspection and sanction risk.
Beyond the Text: How Authorities and the Market Actually Operate
For borrowers, the signs separating a lawful finance company from an unlicensed lending app lie in three one-minute checks: presence in the State Bank’s licensed credit-institution list, a contract stating the total loan cost as one clear figure, and collection reminders via official numbers and documents instead of threatening messages from strange numbers. Missing any one, the borrower should treat the loan as outside the protection zone.
What to Do: Action Checklist
The steps below turn the analysis above into concrete work:
- First, test your own situation against this ground: A consumer finance company is a non-bank credit institution under the Law on Credit Institutions 32/2024/QH15, permitted to lend for consumption (including instalment loans and lending via cards and apps) but not to take personal deposits like a bank or provide payment services through customer accounts.
- Record the application point specific to this case instead of copying conclusions from another case: Establishing a finance company belongs to the State Bank’s strict licensing group: minimum charter capital at the high level prescribed for non-bank credit institutions, founding shareholders must prove financial capacity and not be prohibited persons, with a qualified executive team.
- Prepare the evidence and file relating to the following point before dealing with authorities or partners: For borrowers, the signs separating a lawful finance company from an unlicensed lending app lie in three one-minute checks: presence in the State Bank’s licensed credit-institution list, a contract stating the total loan cost as one clear figure, and collection reminders via official numbers and documents instead of threatening messages from strange numbers. Missing any one, the borrower should treat the loan as outside the protection zone.
- Answer the question clients ask most directly with this conclusion, and keep it on file: The tightening focuses on transparency of total loan cost in the contract, limits on harassing reminder conduct, and separating insurance from credit conditions. A finance company remains a licensed credit institution for consumer lending under the Law on Credit Institutions 32/2024/QH15 — what is tightened is sales and collection practices, not lending itself.
Frequently Asked Questions
What are the new rules on consumer lending?
The tightening focuses on transparency of total loan cost in the contract, limits on harassing reminder conduct, and separating insurance from credit conditions. A finance company remains a licensed credit institution for consumer lending under the Law on Credit Institutions 32/2024/QH15 — what is tightened is sales and collection practices, not lending itself.
Are debt-collection calls and bundled insurance banned?
Collection by threats, insults or pressure through unrelated relatives is prohibited, and reminder frequency is limited under the consumer-lending rules for finance companies. Bundled insurance is not absolutely banned, but making insurance a condition of the loan is prohibited — customers may refuse insurance without losing the right to be considered for the loan.
What are the conditions to establish a finance company?
Establishing a finance company needs a State Bank licence with high minimum charter capital for a non-bank credit institution, financially capable and non-prohibited shareholders, a qualified executive team and a feasible business plan. This is a hard licence group, which is why the market prefers acquiring existing companies.
What are the M&A opportunities for finance companies?
M&A opportunity lies in the gap between licence-plus-distribution-network value and the compliance cost a small owner struggles to bear. Foreign investors usually buy shares within permitted ownership limits and diligence deeply the past complaint and collection file — the factor deciding post-signing price adjustments.
This article has been quality-reviewed by the FLAW AI Legal Council