How to identify usury and legal analysis in Vietnam?

The crime of lending heavy interest in civil transactions of the 2015 Criminal Code of Vietnam is classified in the group of crimes of infringing upon the economic management order, specifically the order in the field of monetary business. Offenders use the money to do illegal business.

Evidence for the above crime is through Judgment 233/2018/HS-ST dated September 19, 2018 on the crime of lending heavy interest in civil transactions, specifically:

“On January 15, 2018, Mr. H agreed to write a receipt to borrow money from Nguyen Anh T for the amount of VND 14,000,000, paying an interest of VND 280,000 per day (equivalent to 60%/month), the principal of the loan. When Mr. H is able to pay the original loan amount once, the loan contract will terminate. By about March 2018, Mr. H could not pay interest, so he hid. On May 8, 2018 he met Mr. H at the beginning of alley 140 Nguyen Van Cu, An Hoa ward, then asked for money and used his foot to kick H.

Around September 2017, Ngo Doan Th went to collect the loan, monthly T paid Th's salary 4,000,000 VND and took care of accommodation. The form of T loan is: The person who needs to borrow money will directly meet T or make a phone call to agree on the loan amount, provide an identity card, and household registration book. T is the one who decides the lending and determines the lending interest rate on a case-by-case basis. The borrower agrees to meet with T to hand over the money or T to give it to Th to deliver and ask the borrower to write a receipt according to a pre-prepared form. The receipt only shows the borrower's full name, address, loan amount, loan time and signature, not showing the loan interest rate in the receipt.

In Article 468 of the 2015 Civil Code, there are provisions on loan interest rates as follows:

Article 468. Interest rates

1. The rate of interest for a loan shall be as agreed by the parties.

The rate of interest for a loan agreed by the parties may not exceed 20% per year, unless otherwise prescribed by law. According to actual conditions and at the proposal of the Government, the Standing Committee of National Assembly shall adjust the above interest and send report to the National Assembly at the latest session.

If the agreed interest exceeds the maximum interest prescribed in this Clause, the agreed interest shall become invalid.

2. Where parties agree that interest will be payable but fail to specify the interest rate, or where there is a dispute as to the interest rate, the interest rate for the duration of the loan shall equal 50% of the maximum interest prescribed in Clause 1 of this Article at the repayment time.

Thus, the interest rate is agreed upon by the parties and must not exceed 20%/year of the loan amount. The average maximum loan interest rate per month will be: 20% : 12 months = 1,666%/month.

Depending on the case, the act of usury may be administratively sanctioned: Point d, Clause 3, Article 11 of Decree No. 167/2013/ND-CP on administrative sanctions in the field of security and order For the whole society, a fine of between VND 5,000,000 and 15,000,000 may be imposed on the act of loan sharking. basic interest rate announced by the State Bank of Vietnam at the time of lending”. The basic interest rate set by the State Bank of Vietnam is 9%/year announced under Decision 2868/QD-NHNN dated November 29, 2010.

Regarding the crime of lending heavy interest, Article 201 of the 2015 Criminal Code is as follows:

1. Any person who offers loans at an interest rate that is five times higher than the maximum interest rate specified in the Civil Code and earns an illegal profit of from VND 30,000,000 to under VND 100,000,000 or recommits this offence despite the fact that he/she has incurred an administrative penalty or has an unspent conviction for the same offence shall be liable to a fine of from VND 50,000,000 to VND 200,000,000 or face a penalty of up to 03 years' community sentence.

2. If the illegal profit earned is ≥ VND 100,000,000, the offender shall be liable to a fine of from VND 200,000,000 to VND 1,000,000,000 or face a penalty of 06 - 36 months' imprisonment.

3. The offender might also be liable to a fine of from VND 30,000,000 to VND 100,000,000, be prohibited from holding certain positions or doing certain works for 01 - 05 years.

According to the provisions of the above Law, usury will be prosecuted for criminal liability when satisfying the following two signs:

+ First: according to the above provisions, people lend to other people a high-interest rate with an interest rate of 5 times or more the highest interest rate specified in the Civil Code. In particular, Clause 1, Article 468 of the 2015 Civil Code stipulates that the parties have an agreement on the agreed-upon interest rate not to exceed 20%/year of the loan.

+ Second: In addition to the interest rate condition, the above offence must also satisfy one of the following conditions: Firstly, to gain illicit profits from VND 30 million to under VND 100 million; secondly, has been administratively sanctioned for this act but within twelve months; thirdly, has been convicted of this crime, has not yet been expunged, but still commits it.

The highest interest rate prescribed by law per month is: 5 times x 1.666% = 8.33%. Thus, only when the interest rate is 5 times or more higher than the highest interest rate prescribed by the law, it will be considered a crime of usury under the criminal law.

In case the borrower fails to repay the debt and the lender sues, the law only protects the interests of the lender within the interest rate allowed by the law. The excess of interest will not be protected by law.

It can be seen that the act of lending at high-interest rates is a dangerous and potentially dangerous crime that affects social order and safety. Therefore, the authorities need to take strict measures against this type of crime.