THE BLURRING OF FORMAL LENDING AND INFORMAL PRACTICES Among these borrowers, 13 took cash loans and instalment plans from FE Credit, the leading and most controversial financial company in Vietnam. The convenience sample comprised 14 bankers working for public banks, joint-stock banks and fincos, and 22 borrowers who took consumer loans. While they allow banks and fincos to comply with non-performing-loan (NPL) regulations and limit credit risk, they also cause discontent and erode public trust in consumer finance.Дata for this article comes from in-depth interviews conducted in-person and online with 36 informants from Hanoi and Ho Chi Minh City. The implementation of these practices in the face of policy discourse and legal efforts to eliminate them both supports and subverts consumer finance development. This paradox reveals an ambivalence in the consumer finance sector, a double standard of formal lenders when they employ collection practices that they themselves denounce as informal and coercive when such methods are similarly applied by moneylenders. Moreover, fincos may hire debt collectors connected to black credit gangs to collect bad debt using heavy-hand tactics. On the other hand, banks and financial companies (fincos) harass borrowersвЂ™ social connections who are not legally responsible for repaying their debt. On the one hand, state and financial actors promote consumer finance as a tool to consolidate financial institutions, depersonalize credit relations, and eradicate an вЂarchaicвЂ™ yet persistent informal sector typified by вЂblack creditвЂ™ gangs and personalized credit relations. This recent development raises an interesting paradox. Vietnam is experiencing a consumer finance boom. Emmanuel Pannier is a Research Fellow at the French National Research Institute for Sustainable Development (IRD). Le To Linh lives in West Virginia and is studying International Studies at Hollins University. TГґ Thu Phuong lives in Hanoi and holds a Bachelor in Human Rights and Political Science from Columbia University and Sciences-Po Paris. Bui Thi Thu Doai lives in Hanoi and is studying towards a BA in Development and Economics at the London School of Economics.

Trinh Phan Khanh lives in Hanoi and is a recent political science graduate from Leiden University, specializing in international relations.

* Nicolas Lainez is Visiting Fellow at ISEAS вЂ“ Yusof Ishak Institute. There is ambivalence among formal lenders when they employ extortionary collection practices that they officially denounce, which is characteristic of transitional countries.While these controversial collection practices support consumer finance by limiting non-performing loans in the banking system, they create discontent and public trust erosion in consumer finance.

Some financial companies such as FE Credit appear to go beyond conventional collection practices by hiring external collectors with ties to black credit gangs that harass borrowers and their personal connections.However, banks and financial companies use controversial collection practices, including threatening borrowersвЂ™ relatives, friends and employers who are not legally liable for repaying the debt. Policy-makers and financial players promote consumer finance as an antidote to black credit gangs or usurious practices.Consumer finance is a thriving sector that has been growing at an annual pace of 20 percent in Vietnam.In this photo, ATM counters amidst concern of COVID-19 coronavirus inside a shopping mall in Hanoi on 14 August 2020. Consumer finance has been growing at an annual pace of 20 percent in Vietnam.

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