Lenders ask BoT for wider customer base

Lenders ask BoT for wider customer base

A man pulls a cart carrying parcels to be delivered by train at Hua Lamphong station in Bangkok. The central bank has set restrictive measures for lenders providing services for low-income earners. CHANAT KATANYU
A man pulls a cart carrying parcels to be delivered by train at Hua Lamphong station in Bangkok. The central bank has set restrictive measures for lenders providing services for low-income earners. CHANAT KATANYU

Five nanofinance licence holders have asked the central bank to widen lending criteria to more than just for occupational purposes.

"We all agree that nanofinancing loans should not be limited to occupational purposes as it would be difficult [to check how the loan is utilised]," said Kajit Sereerat, managing director of Sahapaiboon (2558) Co, after a meeting with the Bank of Thailand.    

According to regulations, nanofinance lenders can provide unsecured loans for occupational purposes and the process of loan approval is flexible in line with the characteristics of each customer group based on the policy of each operator.

The Finance Ministry has already awarded licences to five non-bank companies — Thai Ace Capital Co, Fast Money Co (a subsidiary of SET-listed Srisawad Power 1979), Mackale Group Plc, Aira & Aiful Plc and Sahapaiboon.

The scheme is one of the government's efforts to address the problem of underground loans faced by low-income earners who cannot access formal lenders. 

Operators with registered capital of at least 50 million baht are eligible to become nanofinance institutions.

Commercial banks and registered institutions can operate the nanofinance scheme immediately without seeking permission from the finance minister, but non-bank lenders have to gain the minister's approval.

Interest rates for nanofinance will be capped at 3% per month or 36% a year, with the principal not exceeding 100,000 baht in each case.  

Mr Kajit expects Sahapaiboon to start its nanofinance business on July 1 and its assets currently stand at 50 million baht.

The company, a small lender with a focus on motorcycle loans, aims to provide nanofinance in Roi Et province.

Mr Kajit said the company aimed to offer loans to those who have engaged in merchant business for at least one year with licences, but no restriction would be imposed in terms of professions.

The Bank of Thailand has reiterated that nanofinance licence holders must comply with the policymaker's regulations and management practices, said Ronadol Numnonda, an assistant governor of the supervision group.

Nanofinance lenders are not permitted to engage in deposit business or seek funding from the public. They are allowed to issue bills of exchange placed privately and offer debentures under the Securities and Exchange Act.

Operators must submit reports of their outstanding loans on a monthly basis to the central bank and the Finance Ministry within 21 days of the following month, said Mr Ronadol.

Somchai Kosirimongkol, Mackale Group's managing director, said the company expected to begin its nanofinance business in July and its current debt-to-equity ratio stood at 0.05%. Market vendors and farmers are its main targets.

Thida Kaewbootta, a director of Srisawad Power, said the company expected to start its nanofinance business next week and its debt-to-equity ratio stood at 1%.

The company is not worried about imposed regulations by the central bank but rather about customers' debt repayment ability, she said.

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