The Finance Ministry's Fiscal Policy Office (FPO) is likely to allow financial institutions and insurance firms to offer reverse mortgages so elderly people can borrow against the equity in their homes.
The FPO earlier sought to restrict reverse mortgages to the state-owned Secondary Mortgage Corporation, but the agency is too small, said director-general Krisada Chinavicharana.
The FPO will consider letting the Government Savings Bank and GH Bank offer such mortgages, as they can do so without amending the law.
Reverse mortgages have been proposed as a financial tool to help Thailand as it becomes an ageing society.
The percentage of Thais aged 60 and over is expected to increase from 14% of the population now to 17.5% in 2020, 21.2% in 2025 and 25.2% in 2030, according to FPO estimates.
Reverse mortgages are a popular financial instrument in South Korea. The loan scheme is called a reverse mortgage because its payment structure is reversed in comparison with regular mortgages. Under the scheme, lenders make payments to elderly borrowers who are still able to live in the home.
If a borrower passes away, a part of the home can be inherited if proceeds from the home sales exceed the amount owed.
Mr Krisada said both state-run and corporate financial institutions have the potential to offer reverse mortgages because of their sound financial positions.
Financial institutions may be allowed to securitise homes under the reverse mortgage scheme to raise funds for business expansion, he said.
Banthornchome Kaewsa-ard, a fiscal policy adviser to the FPO, said recently Kasikornbank showed interest in reverse mortgages and the Finance Ministry was considering an appropriate model.
Separately, Mr Krisada said the FPO is pushing for smaller lenders than nanofinance, called picofinance, to add options for low-income earners to access formal financial sources and avoid loan sharks.
The FPO initially set the criteria for those interested in becoming picofinance lenders: minimum registered capital of 5 million baht, well below the nanofinance minimum of 50 million. The low registered capital requirement is to draw loan sharks to enter the formal financial system, he said.
Interest rates for picofinance will be capped at 3% per month, or 36% a year, the same level as nanofinance, but the former is limited to loans of 50,000 baht per borrower compared with 100,000 baht for the latter, said Mr Krisada.
Picofinance is under consideration by Finance Minister Apisak Tantivorawong.
The FPO estimates 1.34 million out of 20 million households across the country do not have access to formal lending institutions and 600,000 households have borrowed money from loan sharks.