Tiếng Việt
Table of Contents
1. What is usury?
2. Interest rates according to legal regulations
3. How is usury punished?
3.1 Administrative sanctions
3.2 Criminal prosecution
1. What is usury?
According to Clause 1, Article 2 of Resolution No. 01/2021/NQ-HDTP guiding the application of Article 201 of the Penal Code and the trial of criminal cases on the crime of usury in civil transactions:
1. “Usury” is a case where the lender lends money to the borrower at an interest rate 5 times or more higher than the highest interest rate prescribed in Clause 1, Article 468 of the Civil Code.
In case of lending with other assets (other than money), when settling, the value of that asset must be converted into money at the time of transferring the borrowed assets.
Accordingly, the maximum interest rate stipulated in Clause 1, Article 468 of the 2015 Civil Code must not exceed the permitted interest rate of 20%/year, or 1.66%/month. In case of lending with an interest rate of 5 times or more this rate, it is called usury.
2. Interest rate according to law
According to Article 468 of the 2015 Civil Code, it is stipulated as follows:
“Article 468. Interest rates
1. The rate of interest for a loan shall be as agreed by the parties.
Where the parties have agreed on the interest rate, such agreed rate must not exceed twenty (20) per cent per annum of the loan, unless otherwise provided by other relevant laws. Based on the actual circumstances and as proposed by the Government, the Standing Committee of the National Assembly shall make a decision on adjustment of the interest rate mentioned above and make a report to the National Assembly at the next meeting session.
Where the agreed interest rate exceeds the interest rate cap provided in this clause, the excess interest rate shall be ineffective.
2. Where parties agree that interest will be payable but fail to specify an interest rate and there is a dispute as to the interest rate, the interest rate shall equal fifty (50) per cent of the interest rate cap provided in clause 1 of this article as at the date on which repayment is made.”
Based on the above provisions, when borrowing from each other, the parties shall agree on the interest rate to be paid, but the maximum shall not exceed 20%/year or 1.66%/month.
3. How to punish the crime of usury?
3.1 Punishment for administrative violations
According to the provisions of Point d, Clause 4, Article 12 of Decree 144/2021/ND-CP:
“4. A fine ranging from 10.000.000 VND to 20.000.000 VND shall be imposed for any of the following violations:
d) Running a pawn business with the interest rate exceeds that specified in the Civil Code;”
3.2 Criminal prosecution
According to Article 201 of the 2015 Penal Code, amended and supplemented in 2017, it is stipulated that:
“Article 201. Usury in civil transactions
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 previously incurred a civil penalty or has a previous conviction for the same offence which has not been expunged 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 is VND 100,000,000 or over, 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.”
In addition, Resolution 01/2021/NQ-HDTP 2021 guiding the application of Article 201 of the Penal Code and the trial of criminal cases on the crime of usury in civil transactions, in Article 7, also stipulates criminal prosecution in a number of cases as follows:
“Article 7. Criminal prosecution in a number of specific cases
1. In case a person who commits multiple acts of lending at heavy interest, but the amount of ill-gotten gains of each offense is 30,000,000 VND or more, if each offense has not been examined for criminal liability and the statute of limitations for criminal liability has not expired, in addition to being subject to a penalty frame corresponding to the total amount of ill-gotten gains, they are also subject to aggravating circumstances of criminal liability “committing 02 or more crimes” specified at Point g, Clause 1, Article 52 of the 2015 Penal Code.
2. In case the person who repeatedly commits the act of lending heavy interest but the ill-gotten gains are less than 30,000,000 VND but the total amount of ill-gotten gains is 30,000,000 VND or more and these acts have never been sanctioned for administrative violations, the statute of limitations for sanctioning administrative violations has not expired, shall be examined for penal liability with a penalty frame corresponding to the total amount of ill-gotten gains of heavy interest loans, without applying aggravating circumstances of criminal liability “committing crimes 02 or more times” specified at Point g, Clause 1, Article 52 of the 2015 Penal Code
3. In case a person who commits multiple acts of lending heavy interest, including one time lending heavy interest, making unjust profits of VND 30,000,000 or more and this act of lending heavy interest has not expired the statute of limitations for criminal liability examination; and other acts of lending heavy interest for ill-gotten gains of less than VND 30,000,000, these acts have not been sanctioned for administrative violations and have not expired the statute of limitations for sanctioning administrative violations, shall be examined for criminal liability with a penalty frame corresponding to the total amount of ill-gotten gains of heavy interest loans, do not apply the aggravating circumstances of criminal liability “committing 02 or more crimes” specified at Point g, Clause 1, Article 52 of the 2015 Penal Code.
4. In case a heavy-interest lender commits various acts related to debt collection (such as: using force, threatening to use force, mentally threatening, causing injury, causing health damage or other acts to take property,…), depending on each case, they will also be criminally handled for the corresponding crime, if enough elements constitute a crime.
5. In case loan sharks make an unjust profit of VND 30,000,000 or more, but for unintended reasons, the lender has not made an unjust profit or has made an unjust profit of less than VND 30,000,000, he/she shall be examined for criminal liability under the penalty frame corresponding to the total amount of ill-gotten gains they aim to achieve. The determination of the amount of ill-gotten gains shall be carried out under the instructions in Article 6 of this Resolution. When deciding on penalties, the Court applies Article 15 and Clause 3, Article 57 of the 2015 Criminal Code on unsatisfactory offenses.”
Thus, if a subject lends money at an interest rate higher than the legal interest rate and profits from that lending, depending on the level of violation and the number of violations, the lender will be administratively sanctioned or prosecuted for the crime of usury if there are sufficient elements to constitute this crime.