Finance Ministry cracks down on banks forcing insurance on customers

The ministry on Monday ordered its Insurance Supervisory Administration (ISA) to intensify the inspection of insurance companies and have staff on duty 24/7 to receive reports from customers who are forced to buy insurance packages via banks.

Customers since last year have been complaining that bank staff have told them they can only receive loans if they buy insurance packages worth 3%-4% the value of the loan.

The finance ministry also ordered ISA to cooperate with inspectors of the State Bank of Vietnam to prevent such activities.

The ministry also wants ISA to report on the Vietnam insurance market, including the number of companies and their activities, along with their compliance with the laws, especially in investing in high-risk assets.

There are reports that many bank employees are taking advantage of the situation of tightened credit to force customers to use bancassurance services.

Bank loans, in 2022, exceeded deposits for the first time in 10 years, causing a liquidity crunch and a deposit interest rate race.

According to Yuanta Securities Company, many banks reached the loan-to-deposit ratio ceiling and so had to rely on the interbank market and foreign financial institutions for liquidity.

Mobilization improved in the last two months of last year when deposit interest rates were high, but experts foresee the difficulties to continue this year.