Pico operators ask to double loan limits
Customers' living costs not being met
The Pico Finance Thailand Association has asked the Finance Ministry's Fiscal Policy Office (FPO) to double the lending ceiling for picofinance operators to 100,000 baht per borrower to better serve demand.
"The current cap at 50,000 baht per borrower isn't sufficient to match customers' high cost of living, funding demand for business operations, and does not allow clients to pay off underground loans," said Somkiat Jaturabundit, president of the association.
The association will also ask for the ministry's permission for picofinance operators to charge 15% per year for loans that exceed 50,000 baht.
Ministry rules require picofinance operators to have minimum registered capital of 5 million baht and confine their operations to a particular province.
They are permitted to extend loans for general purposes and are limited to loans of 50,000 baht per borrower at a maximum interest rate of 36% a year.
Picofinance was initiated by the ministry to help low-income earners more easily access lending.
Mr Somkiat said 794 companies have sought picofinance licences, while 382 have begun business operations.
Total picofinance loans amounted to 1.56 billion baht with 56,558 borrowing accounts at the end of last year.
Picofinance is the most appropriate tool to address the loan shark problem, he said.
Mr Somkiat forecast outstanding picofinance loans would almost double to 3 billion baht this year as the government continues its crackdown on loan sharks, which may encourage loan sharks to seek picofinance licences.
The amended regulations that allow picofinance operators to extend services to auto and motorcycle title lending should boost their loan demand, he said.
Finanigo Co, a fintech firm under Ragnarok online game provider Electronics Extreme, aims to lend 200-400 million baht to picofinance operators in the second quarter.