More nanofinanciers jump into the fray

More nanofinanciers jump into the fray

A vendor arranges towels for sale at Chatuchak Market. The government is working to offer nanofinancing to low-income earners who cannot access formal lenders. WICHAN CHAROEN-KIARTPAKUN
A vendor arranges towels for sale at Chatuchak Market. The government is working to offer nanofinancing to low-income earners who cannot access formal lenders. WICHAN CHAROEN-KIARTPAKUN

The Finance Ministry is expected to approve 10 additional licences for nanofinance applicants.

The 10 applying under the nanofinance loan scheme will be given their licences gradually, as they earlier faced problems related to documentation, a ministry source said.

The Bank of Thailand has forwarded Muangthai Leasing Plc’s application to the ministry for approval, while another company is pending the central bank’s deliberations, the source said.

If approved, these two companies would be the sixth and seventh non-bank lenders to gain nanofinance operating licences.

Earlier, 17 applicants applied for nanofinance operating licences with the central bank.

Five of these received Finance Ministry approval.

The source said some of the five licensed lenders were expected to commence their nanofinance loan business next week.

But the loan amounts will be confined to a few million baht since operations are just beginning and these lenders must assess their risk management, as no collateral is imposed for nanofinance lending.

The first five non-bank companies awarded nanofinance licences are Thai Ace Capital Co, Fast Money Co (a subsidiary of SET-listed Srisawad Power 1979), Mackale Group Plc, Aira & Aiful Plc and Sahapaiboon (2558). Applications were opened in January.

The scheme is one of the government’s efforts to address the problem of loan sharks used 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 under central bank criteria, with a debt-to-equity ratio not exceeding seven times their registered capital.

If an operator’s ratio exceeds the stipulated threshold, it has until next Jan 23 to reach the specified ratio.

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

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.

Nanofinance lenders are permitted to extend loans only for occupational purposes.

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