The State Bank of Vietnam (SBV) has directed commercial banks to tighten control over credit card payments to prevent the improper use of credit cards.

Illustrative photo (Source: baodauthau.vn)

Under the instruction, the SBV has asked commercial banks to review transactions and terminate contracts with customers suspected of using their credit cards for improper purposes.

Banks should review contracts with units accepting credit card payments and supplement requirements on the use of credit cards, as well as work out solutions to supervise, inspect, manage and address violations by these units.

Also, criteria for choosing units that can accept credit card payments should be created.

Members of the Vietnam Bank Association need to update their information on the illegal use of bank cards.

If banks detect violations by units accepting credit card payments, they must report these violations to the SBV and the Vietnam Bank Association.

The central bank also asked units accepting credit card payments and cardholders to comply with regulations on bank cards.

The move was made after some banks have consulted with their credit card holders, allowing them to borrow consumer loans at a preferential interest rate of 1.69 percent per month or 20.28 percent per year.

To get the loans, whose interest rate is lower than that of consumer finance companies, credit card holders need only ask their banks to transfer money from credit cards to other bank accounts. The cardholders then will withdraw cash and pay the principal and interest in 12, 15, 18, 21 or 24 months.

According to the current legal regulations, credit cardholders are not allowed to transfer money from their credit cards to any other bank accounts.

Besides, it was reported some units accepting credit card payments have collaborated with cardholders to conduct virtual transactions to withdraw cash, which is illegal.