This is a 100% true story that happened a few years ago. When the wife of a bank CEO received a debt demand letter from another bank, she opened it and couldn’t believe her eyes: 2,000 VND.
A representative from a joint-stock bank said that everything was done according to the procedure, and there was no mistake in the amount of money or the recipient of the debt demand. However, the problem lies in demanding a 2,000 VND amount with a debt demand letter that has a signature and a red seal from the bank, which seems like a joke resulting from automation without considering the cases that should be excluded.
According to the system, the debt demand letters with the outstanding loans of customers will be automatically printed out, then signed, sealed, and sent out. No one cares about the 2,000 VND amount, which is even smaller than the deposit in the debt demand, because there are too many individual customers, and the person signing may not even read the figures in their own signed letter. “Nowadays, every bank has millions of individual customers and the system operates automatically. If there are no strict control rules, a 2,000 VND debt demand… that’s normal. What matters is that after the discovery, it must be corrected, so the incident doesn’t become unpleasant,” he said.
On the other hand, the CEO of a joint-stock bank in Hanoi commented on the case of demanding nearly 9 billion VND for an 8-million VND credit card expenditure: “The cause may be similar to the case of a 2,000 VND debt demand letter.” According to him, in both cases, the amount that the bank demands from customers is likely to be definitely not wrong according to the contract. With credit card loans with an interest rate of about 3-4% per month, plus an overdue interest rate of 150%, the interest compounds continuously, so the loan amount of over 8 million VND “grows exponentially”. After 11 years, the principal and interest amount to nearly 9 billion VND is accurate. The similarity between the two incidents is that the bank doesn’t demand the wrong amount, and they are both caused by the system.
However, the CEO said: “Usually, a bank with a good designed procedure will not let the interest for an 8 million VND loan reach 8 billion VND. If the unsecured loan is not paid off after about 12 months (which may be longer depending on each credit institution), the bank will stop calculating the interest, make provisions, and erase the bad debt. Most banks do not continue to calculate the principal, nor the continuous overdue interest of 11 years like this, because in principle, this is impossible for anyone to repay the debt in that way, it’s just a joke.”
The difference between the 2,000 VND debt demand and the nearly 9 billion VND demand for an 8 million VND expenditure after 11 years is that the 2,000 VND demand doesn’t include any interest, whereas the similarity between the two cases is that neither bank saw the funny aspect of the debt demand: one is unnecessary, one is unfeasible.
The CEO said that usually, banks will sell bad debts to AMC companies and they won’t demand the full interest and principal for all debts. With a special debt like the over 8 million VND expenditure, which has to pay nearly 9 billion VND, it’s simply the amount that should be demanded to some extent, not the full amount. This doesn’t take into account the legal issues related to how the person spent that amount with a credit card. “Demanding nearly 9 billion VND is just for intimidation, no one would actually do it. But we shouldn’t let the incident make a fuss, especially at this time,” he commented.
(* The name of the character has been changed)
