Many consumer finance companies are firing on overdue borrowers, frantically issuing court subpoenas and applying for enforcement. Can they recover the money they are owed as a result? Not necessarily.
Author|Secretary to the Board
Production|Consumer Finance Channel
The "Consumer Finance Channel" found in online judgment documents that many consumer finance companies are trying to recover overdue loans. payment, taking the borrower to court, and even enforcing the borrower as a defaulting executor even when the borrower has not fulfilled its repayment obligations. However, when the court executed the loan, it was discovered that some of the borrowers had lost contact and had no property to repay the debt.
The enforcement ruling on the dispute over the Bank of China Consumer Finance loan contract shows that the persons subject to execution, Liang Qian and Yang Benqing, should pay interest and late payment fees of 75,638.09 yuan, and attorney fees of 1,783 yuan to the applicant, Bank of China Consumer Finance Co., Ltd. The application execution fee is 1,107 yuan. Because Liang Qian and Yang Benqing failed to perform their obligations in accordance with the above-mentioned effective legal documents, Bank of China Consumer Finance Co., Ltd. applied to the People's Court of Jiangyang District, Luzhou City, Sichuan for compulsory execution.
The People's Court of Jiangyang District, Luzhou City, Sichuan Province summoned the borrower to the court for investigation and questioning, and reported the property status. However, the whereabouts of the persons subject to execution, Liang Qian and Yang Benqing, are still unknown. They have not performed their obligations and have not declared their property to the court.
Then, the court inquired about the property under the name of the person subject to execution through the execution network investigation and control system, including financial institutions, vehicle registration departments, securities institutions, online payment institutions, and the Ministry of Natural Resources, and only found that the persons subject to execution were Liang Qian and Yang Benqing. There are only sporadic deposits, and BOC Consumer Finance has not required disposal.
In addition, the court investigated and understood the person's unit and the people around his residence through entrusted investigations, telephone contacts, on-site visits, etc. And the enforceable property of the person subject to execution could not be found.
After exhausting all means to find out that the person subject to execution has no other property for execution, Bank of China Consumer Finance did not provide any property or property clues that the person subject to execution had available for execution, so it had no choice but to agree to the court's termination of this execution. program.
Survey information shows that BOC Consumer Finance has issued more than 37,029 judgment documents and the amount involved is 2.461 billion yuan. Both the number of cases and the amount involved are far ahead of other licensed consumer finance companies. Among them, there were 33,292 loan contract disputes, and loan contract disputes were mainly concentrated in 2019. BOC Consumer Finance also sent court summons to many overdue borrowers through the court.
Industrial consumer finance is also active in judicial collection. There were 3,306 industrial consumer finance judgment documents, involving an amount of 239 million yuan. Judicial cases involving industrial consumer finance are also dominated by loan contract disputes, with the number reaching 3,045. It is worth noting that the number of judgment documents issued by Industrial Consumer Finance has increased significantly this year, reaching nearly 2,000.
Despite the use of judicial collection, industrial consumer finance is faced with situations where the borrower has no property to enforce in many cases. In August, the Chenghua District People's Court of Chengdu enforced the loan dispute between Industrial Consumer Finance Co., Ltd. and Sun Yang Finance, and issued an execution notice and a property reporting order to Sun Yang, the person subject to execution. After exhaustive property investigation measures, no other property available for execution was found.
After the People's Court of Chenghua District, Chengdu notified Industrial Consumer Finance to inquire, Industrial Consumer Finance failed to provide clues about other properties of the person subject to execution that could be used for execution. In the end, the Chenghua District People's Court of Chengdu issued a consumption restriction order to the person subject to execution.
Consumer institutions frequently sue borrowers, indicating that risk control before and during lending is not in place and the credit review model is imperfect. They may blindly pursue pass rates and ignore overdue and non-performing risks.
According to people familiar with the matter, there are many cases of litigation and debt collection in Bank of China’s consumer finance industry, mainly because Bank of China’s consumer finance products contain some mortgage loan products, and the disposal of non-performing mortgage loan assets requires legal proceedings. Finish. When the total consumption of Bank of China
Looking at the actual borrowing time of Bank of China consumer finance loan disputes, it is mainly concentrated in 2015-2017. In the early years, BOC Consumer Finance was a truly licensed institution that collected beheading interest.
Due to the lack of offline direct stores, BOC Consumer Finance has taken advantage of local agents and intermediaries to develop its business. During this process, when Bank of China Consumer Finance issued loans, chaos in loan charges arose. Charges included loan usage fees, packaging fees, overseas visit fees, etc.
Benefiting from the first-mover advantage in the industry and the brand advantage of its shareholder Bank of China, Bank of China Consumer Finance has continued to conquer cities and territories with its agents and intermediaries scattered across the country, and ranked first with a net profit of 1.375 billion yuan. Ranked first among licensed consumer finance companies in 2017. However, due to business transformation and compliance requirements, BOC Consumer Finance has gradually stepped down from its position as the profit champion.
Currently, BOC’s total consumer finance assets rank fifth among licensed institutions, second only to Home Credit, China Merchants United Bank, Jisi and Industrial Bank. As an established consumer finance company, Bank of China still ranks among the top in consumer finance operating income. Due to the withdrawal of the offline expansion team and regulatory control over product interest rates, Bank of China Consumer Finance has not yet returned to the 1 billion yuan net profit echelon.
The financial report shows that as of the end of June 2020, the total assets of Bank of China’s consumer finance were approximately 31.217 billion yuan, a decrease of 5.12% from 32.902 billion yuan at the end of 2019; the total liabilities were approximately 23.175 billion yuan, compared with 24.976 billion yuan at the end of 2019. Yuan fell 7.21.
Compared with the full-year performance in 2019, BOC Consumer Finance’s net profit in the first half of this year has shrunk significantly. In 2019, Bank of China's consumer finance operating income was 4.315 billion yuan, with net profit reaching 659 million yuan. Revenue in the first half of this year accounted for about 49% of last year's total, which was the same as last year, while net profit only accounted for 15% of last year's total.
Although the customer base of licensed consumer finance companies is second only to banks, it still belongs to the sinking long-tail customer group, which hid high credit risks before the outbreak. After the outbreak of the epidemic, credit risks broke out intensively, and collections faced restrictions on work resumption, supervision, and ethics. Various obstacles have caused a penetrating blow to the asset quality of licensed consumer finance companies.
2020 is a critical year for the digital transformation of Bank of China Consumer Finance and many other consumer finance companies. Can they handle this while being busy with transformation and rushing to collect debts? Related Q&A: I borrowed RMB 10,000 from Bank of China Consumer Finance Loan and still haven’t paid it back?
If a Bank of China consumer finance loan fails to repay the loan of RMB 10,000, first the bank will send a message or call to notify the borrower to repay the loan as soon as possible. Secondly, if the borrower fails to repay the loan, the bank can sue the court for recovery.